Nick Lotito & Seth Kirschenbaum

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Is it illegal to buy a house for someone else?

There are a lot of people here in Atlanta who would do anything for their parents, especially considering how much our parents give to us over our lifetimes. For some people, this need to payback their parents for their generosity came to a head when the housing market burst and parents all over the state started losing their homes to foreclosure.

In order to recoup some of this lost investment, some children wanted to help their parents out by purchasing homes for them. But while this might seem like an incredibly sweet idea, people considering this should stop before they act because it could be considered fraud in some cases. Let's take a look.

When you purchase something for someone else you are considered to be a straw buyer. While there is generally nothing illegal about buying something for someone else, large purchases can be a different story because they oftentimes require financing from a bank. It's at this part of the process that things can go from innocent purchase to illegal activity.

When an individual applies for a mortgage, the bank's presumption is that the individual is going to be making the payments. By looking at a person's credit history, they determine the likelihood of the individual defaulting on payments, making a decision about whether to lend based on this information. But if another party, say the individual's parents, is making these payments instead, the bank doesn't know about the risk of default. It's because of this that you could be accused of fraud.

Not only do prosecutors here in Georgia take mortgage fraud incredibly serious, so too does the federal government. It can be very alarming to suddenly find yourself facing fraud charges for doing something that you thought was a favor to a loved one only to find out that you were actually doing something illegal. Like most people, you might not even know how to defend yourself against the charges, which is why you should know that you can always turn to a lawyer for help in cases like this.

Sources: Investopedia, "Straw Buyer," Accessed May 21, 2015

The Federal Bureau of Investigation, "Mortgage Fraud Overview," Accessed May 21, 2015

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Nick Lotito & Seth Kirschenbaum

Former Federal Prosecutors

918 Ponce de Leon Avenue, N.E. Atlanta, GA 30306 Phone: 404-692-5168 Fax: 404-872-1622 Atlanta Law Office Map