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RISMEDIA, Jan. 8, 2007-According to the FBI, air loans are "non-existent property loans where there is usually no collateral. An example would be where a broker invents borrowers and properties, establishes accounts for payments and maintains custodial accounts for escrows. They may set up an office with a bank of telephones, each one used as the employer, appraiser, credit agency, etc. for verification purposes."

Air loans are the ultimate con in mortgage fraud. The con artist erects an imaginary world of his very own, and every detail is fabricated. The buyer applying for the loan is usually a fictional person (with a fictional identity and credit history) or a real person whose identity has been stolen. Fake pay stubs, W-2's, tax returns, bank statements, and assets may be used to verify the borrower's income, savings, and collateral. Air loan artists often set up phony escrow or title companies and have the air loan proceeds directly wired to company bank accounts.

Although banks and other lending institutions are the biggest losers in air loan scams, average citizens can suffer as well, when their identities are stolen and used to apply for these loans. Fraudsters have devised all sorts of clever schemes to steal identities, ranging from low-tech methods, such as dumpster diving to retrieve discarded bills and statements, to high-tech methods, such as hacking into the databases of financial institutions.

Gerald Small, the poster boy for air loans, stole identities for borrowers by placing a help wanted ad in the local newspapers advertising positions that paid $100,000 a year to applicants with no prior experience. Applicants were required to provide a copy of their driver's licenses, and Small made sure they had unblemished credit histories.

The FTC (Federal Trade Commission) encourages you and other citizens to Deter, Detect, and Defend against identity theft and provides several valuable strategies for guarding your personal information online and off.

Ralph Roberts is a real estate fraud expert and activist and author of Flipping Houses For Dummies and the upcoming book Foreclosure Investing For Dummies (June 2007, John Wiley & Sons).

For more information, visit or contact Ralph at or 1-586-751-0000.