The Federal Bureau of Investigation's estimate that mortgage fraud costs the lending business $1.2 billion a year is off the mark by more than $3 billion, a fraud analyst said at the Midwinter Conference in Park City, Utah, last week.

But a former fraud analyst says the FBI's calculation could be shy by even more than that. And others who work in the mortgage sector scam artists continue to find new ways to fleece lenders.

The FBI's calculation is based on Suspicious Activity Reports, or SARs, which it receives from lenders and others who think they may have been cheated in one way or another. But Arthur Prieston, chairman of the Prieston Group, a California firm which offers an integrated suite of fraud protection, loss mitigation and insurance services, puts fraud losses at $4.4 billion annually.

Prieston bases that figure on claims data for clients represented by his firm's legal services affiliate, the American Mortgage Law Group, which chases down fraudsters. And he says the loss severity is at least 50 percent greater for lenders which are not insured and don't go after perpetrators.

At the same time, a former fraud detection specialist who asked to remain anonymous because he no longer works in the field said the annual take as a result of mortgage fraud is more like $6 billion and growing.

He said "fraud for commission" in which originators will "do anything" to earn a fee is just as prevalent as fraud for profit.

"It's pervasive throughout the entire industry," the source told me in an exclusive interview. "It's growing because the accountability is not there. Risk management (for fraud) is the Rodney Dangerfield of the mortgage business."

The source said fraud for profit also is a growing category, but he said when originators commit fraud "and get away with it, they'll do it again."

Meanwhile, Ronald Frazier, president of LSI, a large automated title and appraisal company based in Santa Ana, Calif., told me he's "seeing a level of fraud in the title industry that I've never seen before."

From a claims perspective, Frazier added, "the last 120 days have been like a mushroom cloud."

The LSI president, whose company is a division of Fidelity National Information Services, laid the blame for the increased level of chicanery, in part, on lenders who have "beaten us down" on costs. And as a result, title firms "don't do all they should do."

Frazier also said "shotgunning," a scam in which a single borrower makes multiple applications to several lenders at one time, also is on the upswing, especially in the home equity sector. These crooks are able to get away with the scam, in part, because they close on the loans almost simultaneously, so they are hard to detect, he said. But he also said some title companies aren't searching the records as diligently as the should because they can't afford to.

Prieston said he expects financially strapped home builders to be the next to try to pull the wool over lenders' eyes. He believes those builders who are sitting with unsold inventory will turn to straw buyers so they can obtain primary mortgages and use the money to pay off costly construction loans.

Once the builder "sells" the finished houses, Prieston believes, "they'll walk, they bail," leaving lenders who gave loans to the pretend buyers holding the bag.

He also said that occupancy fraud, in which buyers say they will live in the house but never do, is still the largest category of fraud his company sees. "The likelihood of default rises by 300 percent if the borrower claims he will reside in the property but doesn't," he said.