Which real estate loan scheme would be best described as an air loan?

• A. A loan applicant falsifies their income sources to qualify for a mortgage.
• B. A property developer applying for a loan submits instances of previous development experience that are fictitious or that they had no part in.
• C. A builder, in collusion with an appraiser and other real estate insiders, fraudulently applies for a loan to construct a building on a nonexistent property and keeps the proceeds.
• D. A fraudster files fraudulent property transfer documents with the property owner's forged signature and then takes out a loan using the property as collateral.

Answer: (C)

Air loans are scams that rely on financing a deal with no real asset backing it. In this scheme, the lender ends up providing funds for a project that doesn’t exist, or for a property that isn’t real, and the proceeds are diverted. The best match is the scenario where a builder, with insiders like an appraiser, fraudulently pursues a loan to construct a building on a nonexistent property and keeps the money. There’s no genuine property or project backing the loan, so the collateral is effectively “air.”

The other scenarios involve misrepresenting other facts (income or experience) or forging documents to obtain a loan against a real property with a forged signature. While these are fraudulent, they don’t illustrate a loan secured by something that doesn’t exist as the core deception.