Unfortunately in today's troubled economic climate while most people are just trying to do what they can to weather the storm, some individuals consider this a perfect opportunity to exploit a vulnerable situation and make a profit.

By the end of last September, 2007, the U.S. Treasury Department stated there were 46,717 cases of mortgage fraud reported - an increase of 35,617 from the previous year. That translated into a dollar loss of more than $813 million. The really shocking part is that only about 7 percent of these cases attach a dollar value to the crime, and in reality the actual amount of money being lost to mortgage scams is much higher.

Some of the more common types of mortgage fraud include: Forged documents: This may involve forging signatures or notary seals on mortgage documents. Especially aimed at new home buyers, certain brokers have been known to inflate prices, or create imaginary down-payments on second mortgages. In some cases homeowners actually sign blank papers, convinced that the details will be filled in later.

Inflated appraisals: In an effort to clear a loan for a client, some lenders have been known to contact the appraiser and request a higher dollar value on the appraised house. What is the harm? The lender gets a sale; the client gets approved for their mortgage; everyone is happy. Happy until the homeowner realizes they have a mortgage they can't really afford.

It's more important than ever for a homeowner to do their due diligence, research the credentials of the lenders they plan to enlist, and above all, be aware of their own financial situation.

Rescue Scams

"Let me deal with your lender": In this scam, the fraudster promises to remove the stress of dealing with a foreclosure by acting as an intermediary between the homeowner and their lender. For a fee, they will handle all the dealings and communications with the lender and their lawyers. The homeowner is thrilled to be relieved of this pressure, gladly pays the company a nominal fee (usually about $1,000 or higher), and breathes a sigh of relief. Once the check is cashed, the rescue company becomes impossible to contact, extra penalty charges accumulate with the client's lender, and things generally go downhill from there.

"Sign over the title to your house": With this scam, the con artist convinces the home owner they can avoid foreclosure by signing over the title to their home and remaining on as a tenant, with the promise of having the house signed back in six months. In reality, the scammer neglects to make the mortgage payments, and racks up a series of phony charges and fees, soaking up any remaining equity in the already debt-laden home.

Spotting a Mortgage Scam As a desperate individual about to lose a home to foreclosure, a friendly voice offering a solution may seem like a ray of hope. First and foremost, don't let your vulnerable situation cloud your judgment. Do not become a victim.

Recognize that anyone contacting you and offering unsolicited advice or a miracle solution to your problems is sketchy at best. Do not sign any contract until your lawyer has read it over, and don't forget "if it's too good to be true, it probably is!"