straw buyer

Definition

Someone who purchases property on behalf of another party who can't or won't reveal their identity, ranging from perfectly legal privacy plays to outright mortgage fraud. The real estate equivalent of a burner phone.

Example Usage

The lender flagged this deal because the buyer's financials don't match the property price—they're concerned about a straw buyer situation.

Origin

Dating to at least the 1920s, 'straw man' terminology applied to real estate transactions where the actual purchaser remains hidden

Fun Fact

Using a straw buyer is a federal crime if done to deceive lenders, punishable by up to 30 years in prison under financial fraud statutes.

Source: Real estate fraud and legal terminology

Related Terms

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bpo

Broker Price Opinion—a real estate professional's estimate of a property's value, essentially an appraisal's less expensive, slightly less official cousin who still gets invited to family gatherings.

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DTI ratio

Debt-to-Income ratio—the calculation that determines if you're financially responsible enough to borrow money, by comparing your debts to your income. It's how lenders mathematically judge your life choices.

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wraparound mortgage

A secondary loan that 'wraps around' an existing mortgage, where the new lender pays the original loan. It's financial inception—a loan within a loan, typically used when someone can't refinance.

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gcfr

Ground Coverage Floor Ratio—the percentage of a lot covered by a building's footprint, regulating density and preserving open space. A municipality's way of preventing you from covering every square inch with structure.

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arm

Adjustable-Rate Mortgage—a loan where the interest rate can fluctuate based on market conditions after an initial fixed period. It's the financial equivalent of a mystery box: exciting at first, potentially terrifying later.

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