• Mortgage schemes take several forms.house image by kruszek from Fotolia.com
  
  Starting in 2006 and worsening in 2008 with the sub-prime mortgage crisis, the economy of the United States has suffered greatly from mortgage fraud schemes. With the failure of large financial institutions and the increased rate of delinquencies and foreclosures, various mortgage schemes have come to light. Mortgage schemes are not the same thing as predatory lending, where mortgage brokers mislead consumers. According to the Federal Bureau of Investigation, mortgage schemes involve lying by misrepresentation or by omission in order to secure a loan.
  
  

Fraud for Housing

• This type of mortgage scheme is one perpetrated by borrowers when they provide false information to try to get a mortgage. They may give false employment information or lie about how much they make or how much they have in assets. Maybe the loan applicant wants a house that he can't afford, so he falsifies loan documents to get it. That is mortgage fraud. According to Freddie Mac, the borrower will sometimes try to include the loan officer in on the fraud.
  
  

Fraud for Profit

• Fraud for profit is a complex scheme. It works by using a person, called a bird dog or a finder, who looks for a distressed house. When a house is located, this finder notifies an investor who pays the finder. (Sometimes, a homeowner initiates this fraud, and there is no finder.) This investor, or straw buyer, usually has good credit and pretends to be a legitimate buyer. Sometimes this straw buyer has stolen someone's identity, but not always. Sometimes the straw buyer sells the use of his name so that someone with bad credit can buy the home. In addition to the finder and the straw buyer, the mortgage broker and the appraiser are in on the scheme. The appraiser will say the house is worth more than it really is in order to get a bigger loan. Both the appraiser and the mortgage broker will receive money for falsifying and approving fake documents in order for the loan to go through. When the loan is approved, the buyer takes the money, pays off everyone involved and defaults on the loan.
  
  

Fraud for Criminal Enterprise

• This type of mortgage fraud is often popular with organized crime organizations who launder money through real estate. In this type of scheme, criminals obtain money from some sort of illegal transaction such as drugs and use that "dirty" money to buy real estate. Then they sell the property quickly in order to receive clean, or "laundered," money.
  
  

Short Sale Fraud

• The short sale fraud is when the perpetrator uses a straw buyer to purchase a house with the intention of defaulting on the loan in order to create a short sale situation. Then the perpetrator will purchase the home at a great discount. In legal instances, a genuinely distressed homeowner gets the lender to agree to the sale of the property at a loss in order to avoid a foreclosure. This is not a fraud.
  
  

Foreclosure Rescue Scams

• Foreclosure fraud is when criminals go after people who are about to have their house foreclosed. They do this in one of two ways. The criminal will tell the homeowner that he can prevent the foreclosure by working with the lender for a fee, which the criminal takes without really negotiating with the lender. The second type of foreclosure fraud is when a criminal will use a manipulated or a forged deed to sell the house or to take out a second mortgage on it, without the homeowner's knowledge.