I honestly have dealt with a couple straw buyers--one who was completely honest and up front with me regarding the situation, and the other who tried to hide the facts thinking I wouldn't find out. Bridgette has the best objective answer in that she says that it may be unethical but it depends on the purpose and intent behind the action.
My first borrower mentioned above was helping a friend and his family buy a home. The friend essentially did not have the greatest of credit but they couldn't afford the interest rates that they were being offered due to their credit scores, which was 2-3% higher than the interest rate I found by using my borrower's score. Essentially the friend paid the mortgage every month. My borrower put his friend on title after a year and a year thereafter, signed a quitclaim while refinancing to hand over the property to his friend completely. No added costs, no twists or turns, just generally wanting to help out a friend.
The other situation was just mere ignorance--it is basically impossible to hide financial and intent information from a mortgage standpoint for the exact reason that the lender and loan officers need to know basically everything about the borrower. Sooner or later, details that were meant to be kept secret will come out and that's what happened with this scenario. To say the least, when everything came loose and we had discussed the situation, the borrowers backed out of the deal.