Well yes, assuming they get caught. The arrangement is questionable for many reasons, but that doesn't mean people don't do it all the time.
1. If it's a loan but the borrower hides it from the lender, it could be mortgage fraud.
2. If it's a loan, the IRS expect you to charge interest, and you owe income tax on the interest you would have received even if you don't charge interest.
3. If it's a loan and you issue a gift letter, you could be burned if the relationship goes sour. You would also have no standing in bankruptcy court or with an insurance company if the borrowers had a sudden reversal of fortune through no fault of their own (job loss, catastrophic fire loss, earthquake, etc.).
Just know what you are getting into.
