An individual with excellent credit agrees to apply for a mortgage on behalf of a friend who cannot qualify for financing, with the understanding that the friend will live in the home and make the payments. The person who applies for the loan in this scenario is known as a:

Correct answer: Straw buyer

A straw buyer is a person who applies for a mortgage in their own name but for the benefit of another party who is either unable to qualify or who wants to conceal their identity from the lender. This is mortgage fraud because the lender is misled about who will actually occupy and be responsible for the property. A co-mortgagor and non-occupant co-borrower are legitimate lending arrangements in which all parties are fully disclosed to the lender — for example, FHA permits non-occupant co-borrowers when the arrangement is transparent. The key distinction is lender disclosure: undisclosed arrangements are fraud; disclosed arrangements are legitimate program features.