What is the main characteristic of loans to phantom borrowers?

Loans to phantom borrowers are primarily characterized by being submitted by fictitious employees. This form of fraud involves creating false identities or fake employment records to obtain loans that would not be granted under normal circumstances. Phantom borrowers typically do not exist in the real world, and as a result, their applications are based on fabricated information to mislead lenders.

The creation of fictitious employees allows fraudsters to exploit the lending process, resulting in financial losses for institutions that fail to verify the legitimacy of the applicants and their information. This type of fraudulent activity can often go unnoticed if robust verification processes are not in place.

Understanding this characteristic highlights the importance of stringent compliance measures in the lending process, including thorough background checks and verification of employment and income sources, to prevent such fraudulent activities.