What is the main characteristic of loans to phantom borrowers?

Loans to phantom borrowers are primarily characterized by their association with fictitious identities or entities that do not exist in reality. This means that the applications for these loans are submitted not by real individuals seeking financing, but by fabricated personas created to deceive lending institutions. The goal of such fraudulent activity is often to obtain funds under false pretenses without any intention of repaying the loans.

Phantom borrowing involves elaborate schemes where financial institutions are misled by entirely false documentation or identities, making this option distinctly accurate in identifying the nature of these fraudulent loans.

In contrast, other options focus on elements that are not inherently tied to the concept of phantom borrowers. For instance, high-risk applicants do exist and can be legitimate individuals, and legitimate applications submitted to a loan officer imply authenticity, which is opposite to the concept of phoniness that defines phantom borrowers. Likewise, loans secured by extensive documentation can pertain to genuine loans as well, and do not reflect the fraudulent characteristics of phantom borrowing. Thus, the key aspect of phantom borrowers is their non-existence as real applicants, which makes the correct answer clear.