Final answer:
Nominee loans or straw buyer fraud is the type of mortgage fraud where an individual is paid to apply for a mortgage on someone else's behalf, making them liable without their knowledge. The correct option is D.
Step-by-step explanation:
The type of mortgage fraud described in the question, where an individual is paid to apply for a mortgage on someone else's behalf and is ultimately made liable for the mortgage without their knowledge, is known as Nominee loans or straw buyer fraud.
This fraudulent practice involves using the name and credit history of a "nominee" to conceal the identity of the actual borrower.
Often, the nominee is unaware that they are being used in this manner and may find themselves responsible for mortgage payments or facing the consequences of loan defaults.
While there are various methods of mortgage fraud, like equity skimming and illegal property flipping, nominee loans specifically involve deceitfully using a person as a cover for another individual's financial transactions.
The discussion of identity theft, or 'True-name Fraud,' adds context to how personal information can be misused. Identity theft involves the wrongful acquisition and use of an individual's personal information to undertake financial crimes, including setting up nominee loans. The correct option is D.