House Poor: Pumped Up Prices, Rising Rates, and Mortgages on Steroids: How to Survive the Coming Housing Crisis Mortgage fraud is being called the country’s fastest-growing white-collar crime. It costs lenders more than $1 billion a year and has turned increasing numbers of federal agents into experts on real estate paperwork. These days, they quickly crack cases that once took years to work, experts say.

Mortgage fraud occurs when somebody lies or misrepresents a fact on a statement that a lender uses to make a loan. Banks and mortgage lenders generally are the prime victims when loans are not repaid, but the fallout from a large-scale scam also can devastate individual investors, who sometimes must file for bankruptcy. Communities also suffer when swaths of properties sucked into a scheme go vacant and deteriorate as they fall into foreclosure. Estimates of mortgage fraud losses vary widely, but experts said trend lines pointed up. Although schemes can prosper during good times — such as the recent mid-decade boom when as much as $2.5 trillion in mortgage loans were made each year — they also can flower as the market cools.

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