I've been posting videos about the mortgage market meltdown for some time now. Long after I began my rants, FHLMC or "Freddie Mac" jumped on the bandwagon to "Warn everyone" as well. Nice. As always, big brother is a day late and a dollar short. According to Freddie's public relations director, Brad German, "When you have an increasing population of delinquent and frightened borrowers, it's like a dinner bell for scam artists."

In my research, I picked up a story about an unsuspecting homeowner who was just minding her own business when this "knight in shining armor" rode up to save her.

This was no knight; this was a genuine wolf in sheep's clothing.

Here's the set up: (This is actually a true occurrence, circa December 2007) Delinquent mortgage information is freely available daily through a myriad of reporting services.

Borrower "X" falls behind on their mortgage payments. The existing balance is approximately $180,000. The value of the home was estimated to be $300,000. The mortgage broker contacted the borrowers and promised to help them secure new financing and avoid foreclosure.

Now begins the con. It involves a host of thieves from the mortgage broker, to the appraiser, to "straw borrowers". It's known as "Equity Stripping" and it can involve one or more mortgages and multiple participants. The homeowner is persuaded to sign over the title to the "buyer" who takes out a new mortgage for 100 percent of the homes' value.

The homeowner is convinced that the paperwork merely states they would be able to rent the home with an option to buy it back in the future.

In this scenario, after closing costs, fees, and past-due payments, $100,000 in cold hard cash was left on the table. A check for that ENTIRE amount was made out to the broker.

The fun doesn't stop yet... The first straw buyer didn't make the mortgage payments so the broker recruited a second straw buyer to purchase the home. A second appraisal showed the home had increased in value to $415,000.

After a second closing with the second straw buyer, the broker pocketed ANOTHER check; this time for $110,000.

The original homeowners were unaware of the second purchase or that the mortgage payments were not being made.

Neither buyer had plans on making any mortgage payments so the home went into foreclosure. The original homeowners lost their house.

Thus the con mans plan worked out wonderfully - for him.

This is NOT an isolated incident. Case after case after case are being submitted to Attorney General's all over the nation. The con works because people are so desperate to prevent losing their homes to foreclosure that they'll believe anything anyone tells them. It's misuse of the public trust.

If you're ever in such a situation, seek competent help through your mortgage servicer or contact FreddieMac or FNMA to ask how to protect yourself.