The Federal Bureau of Investigations is cracking down on mortgage fraud like it's organized crime, because, well, it is.

And the agency's message is clear for would-be perps who can't do the time or pay the fine: don't commit the crime.

In it's latest effort to stem the tide of mortgage fraud -- 436 investigations in 2002, 1,036 investigations now -- the agency has been working closely with the Mortgage Bankers Association. Late last week the FBI provided association members with a reminder that mortgage fraud is a federal crime punishable by up to 30 years in a federal pen or up to $1 million in fines -- or both.

The advisory didn't single out only mortgage lenders, but also served as a reminder that consumers who knowingly engage in fraud could also have to dig deep and long if found guilty.

"It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution," the advisory says, pointing to nine federal provisions that could snare mortgage scammers.

The FBI's mortgage fraud section of its "Financial Crimes Report To The Public Fiscal Year 2006" says crooks cost the mortgage industry from about $1 billion to more than $4 billion last year as scammers furiously worked two basic types of mortgage fraud.

The agency said fraud for property amounts to 20 percent of mortgage fraud and occurs when a home buyer lies about income, debt or other information in order to buy a home. More prevalent is fraud for profit, typically involving mortgage industry insiders, multiple loan transactions and several financial institutions conspiring for financial gain.

Fraud for profit includes:

• Property "flipping" or buying property that is falsely over appraised and quickly sold, sometimes several times in rapid succession. Eventually, the borrower defaults and the spoils -- profit -- goes to the crook.

• Using a straw buyer, one whose identity is concealed by using the name and credit history of a willing accomplice.

• Using a fake or purloined identity and credit history to complete a loan application.

• Inflating the appraisal, thanks to a willing appraiser accomplice.

• Skimming the equity. Here, an investor uses a straw buyer to get a mortgage. Prior to closing, the straw buyer signs the property over to the investor, who in turn rents the property out without making any mortgage payments.

How can you avoid getting caught in a web of fraud?

Among other advice, the FBI suggests:

• Don't be a rube. If it sounds too good to be true -- it probably is. Debts, bad credit and other financial holes didn't appear over night. They won't magically disappear over night.

  Be wary of strangers and unsolicited contacts, as well as high-pressure sales techniques. Avoid spam come-ons and web-based advertisements promoting the elimination of mortgage loans and credit card and other debts for an up-front fee to prepare documents to satisfy the debt. Beware of offers to "save" you from defaulting on loan payments or from foreclosure. Beware of zero-down loans and falsely altered information to qualify you for a loan. Don't borrow money you can afford to repay.

  Don't make false statements including overstating your income, the source of your down payment or the nature and length of your employment.

• Ask family, friends, co-workers and others you trust who also recently completed a satisfactory mortgage, for referrals to mortgage and other real estate professionals.

• Shop for a lender by comparing all costs and terms. Don't be sucked in by lenders who tell you they are your last chance at home ownership.

• Don't sign blank documents, documents containing blank sections or documents you don't understand. Get help from trusted individuals to go over the terms of the deal.

• Examine for accuracy recent comparable sales, tax assessments and other documents that offer evidence of a home's true value.

• Review the title history to determine if the property has been sold multiple times recently and within a short period. That could be evidence the property has been "flipped" which can cause artificial value inflation.

• Do your home work and research home prices in the neighborhood before beginning the leg work of home buying.

• Obtain credit and financial counseling, attend home buying classes, seminars or workshops and otherwise bone up on your home buying education before taking the plunge.

Published: March 13, 2007

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.