Real Estate Council of Alberta Fundamentals Practice Exam

Which tactic is commonly associated with the Straw Buyer fraud?

1. Using a legitimate buyer's documentation

2. Collaborating with real estate agents

3. Providing fraudulent credit history

4. Raising property taxes

The correct answer is: Providing fraudulent credit history

Straw Buyer fraud typically involves the use of a third party to obtain property on behalf of someone who may not be able to do so directly, often due to poor credit or financial restrictions. The tactic of providing fraudulent credit history is integral to this scheme, as the straw buyer often misrepresents their financial situation to secure a loan or mortgage. By using false information, the straw buyer helps facilitate the purchase, allowing the real purchaser to avoid scrutiny and potentially benefit from the property without facing the usual barriers they would encounter. Other tactics related to straw buyer fraud might involve misleading the lender or other parties about the intent of the transaction, but using fraudulent credit history directly addresses the core issue of financial misrepresentation that enables this type of fraud. This deception plays a crucial role in persuading lenders to grant loans based on falsified financial credentials, thereby making the fraudulent transaction appear legitimate on the surface.