While the amount of home loans being generated is decreasing, mortgage fraud is on the rise. The Mortgage Asset Research Institute (MARI), part of the LexisNexis Service, released a report on Monday which showed that mortgage fraud incidents increased by 26% from 2007 to 2008. Risk and Information Analytics Group director of Residential Mortgage Solutions with LexisNexis, Denise James, explained this trend, stating "With fewer loan originations today, the data suggests that the economic downturn may have created more desperation, causing more people than ever before to try to commit mortgage fraud,". Another possible explanation for why more fraud incidents are being noted more now then ever is that lenders are being much more diligent when looking at borrowers, and as such are catching what they did not take the time to see before. Of course, according to John Courson, the president/chief executive of the MBA (Mortgage Brokers Association), fraud will always occur no matter how diligent lenders are, as "Fraud enjoys confusion,". According to the report, Rhode Island had the most cases of fraud, followed by Florida, and Illinois.

The are several common types of fraud. One is "fraud for profit", where the goal is to collect cash but never own a property, in line with this is "fraud for housing" where home buyers fake documents so that they can purchase a home or upgrade homes. The biggest amount of fraud seen is with lying on one´s application, followed by altered tax returns and financial statements, or inflating an appraisal or home value. Besides those, there are altered work/employment history, false credit reports, etc.

In today´s market new fraud trends are also emerging. All of the troubled and distraught homeowners about to go into foreclosure are prime targets. Those who prey on them, convince them to turn over the rights/deeds to their properties, saying that they will rent it back to them, but then secretly sell it. The elderly are also being targeted in investor schemes, where they give money for a building project, but the scammer runs off with the money before the project is completed. Hopefully, the marketing community will become better educated and prepared to spot these and save the intended victims added trouble.