Air Loan

The Michael Jordan of lenders, perhaps?

Ever been on a plane trip and forgot your headphones and went to buy some of the cheapo ones the flight attendants have under that little cart of theirs, but discovered that you had packed your wallet in your checked bag, so you ended up borrowing a few bucks from the guy sitting next to you?

That's one form of air loan. But not the one we're going to talk about.

In the financial world, the term "air loan" refers to a type of mortgage fraud. The scam involves a mortgage broker making up both a property and the person buying the mortgage. The goal is to extract money from the mortgage lenders who are providing the loans.

Since banks go to some lengths to ensure that their borrowers actually exist, air loans can get quite elaborate, with fake phone numbers, addresses and emails, along with accomplices in place to verify information about the non-existent person taking out the loan.

In the end, the air loan scammers don't actually pay off the mortgage. Once it's in place and the funds are paid, the grifting mortgage broker lets the fake property slip into default, leaving the lender holding the bag.