August 2017

Bra Money – The Lessons of a Summer Job – Part II

By Warren Shoen


Term of the Month

By Ny Lee

Air Loan

An air loan is a type of mortgage fraud in which a broker makes a loan to a straw buyer (or non-existing buyer) to buy a non-existing property. The scheme typically involves the creation of fake phone banks, addresses, employment status, credit history, and appraisals in order to fool the lender.  Invariably, upon default, the lender will lose everything as there is no payer and no real collateral.  Most air loan schemes are small in nature and do not get the attention of federal regulatory agencies.  Some, however, are rather significant and may involve multiple people working together to perpetrate upwards of $100 million in fraudulent loans.

Key characteristics of an air loan:

  • Typically involve straw buyers
  • No real estate agent is involved in the transaction
  • Mortgage payments, if actually paid, are made by an entity other than the borrower
  • Common payer among multiple loans
  • Common mailing address (or work address) among multiple loans
  • Difficulty in validating the chain of title

Sources: Investopedia, Fannie Mae


Bits & Pieces

By Jeff Torrison

    • When socialite Eliza Jumel was in the process of divorcing former US Vice President Aaron Burr in 1836 she was represented by Alexander Hamilton whose father, also named Alexander, died of a wound suffered in a duel with Burr in 1804.
    • Alcatraz was first used as a prison for civilians in August of 1934 after serving in that role only for the US military beginning in 1868. Its use as a prison ended in 1963 due to high operating costs and in 1973 it became a tourist attraction operated by the National Park Service.  It draws about 1.5 million visitors annually.
    • The Mall of America in Bloomington, Minnesota turned 25 years old this month. It draws approximately 42 million visitors per year, has 2.5 million square feet of retail space, and approximately 530 stores.
    • About 30,000 people died of disease while building St. Petersburg for Russian Tsar, Peter the Great, according to historian Jonathan Miles.
    • Wisconsin’s Department of Corrections operates three dairy farms and a dairy processing facility which sells milk, ice cream, and sherbet (per the August 7 issue of the Milwaukee Sentinel Journal).
    • Americans spend two times North Korea’s annual GDP on their pets each year (per the August 5 issue of The Economist).