Mortgage fraud increases in wake of housing crisis

Mortgage fraud rose to historic levels last year in the wake of the housing market crash, according to a Lexis Nexis Mortgage Asset Research Institute study. There were 70,472 reported cases of suspicious practices that were submitted to the Treasury Department, which is double the number reported in 2006 and 22 times the amount of cases in 2000.

Many of these fraudulent practices took place during the housing boom and subsequent bust several years ago, but are only now being realized, according to the study. From 2009 to 2010 the number of cases dropped, largely due to the decrease in new loans given, according to the study.

A number of people are using the market's struggle to help them create new scams, according to The Wall Street Journal. Some brokers will manipulate the market by getting a house sold for less than it's worth from a lender in a short sale and then turn around and resell it for market value, profiting from the difference. People relocating to the area may have no idea what the property sold for originally and believe they are purchasing it at a fair price.

Foreclosure processing company employees were also involved in fraudulent practices. Many of them confessed to signing thousands of documents daily without reading them, according to the Huffington Post. This practice caused several large market lenders to temporarily stop their foreclosure processes.  

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