Sometimes it's the borrower's fault, and sometimes it's the real estate agent or the lender, both of whom are paid on commission and may have taken a big income hit with the real estate downturn, says Patricia Yamato, president of the Florida Association of Mortgage Brokers. But the bottom line is that if the borrower signs a mortgage application and knows the information on it isn't true, everyone is responsible.

"What I'd like to say to a consumer," Yamato says, "is to take responsibility for homeownership yourself. You look at those payments and you know if you can afford it or not. If someone tries to tell you it's OK to tell some kind of a lie, it's not right. That person is putting you in trouble. This is federal law, and there is no parole in a federal crime. It's something borrowers really need to think about."

With sellers becoming more desperate to unload their properties, they also can be easy targets for fraudsters like those who nearly took over Fulmer's neighborhood. When someone offers to buy a house for more money than the seller is asking, it's hard to turn it down when it's been sitting on the market for months. But it should raise serious concerns, especially if the buyer wants the seller to "refund" the difference between the asking price and the sale price after the closing, or adds money for repairs the seller knows aren't necessary.

Increase predicted
Unfortunately, with the recent cooling of the real estate market, mortgage fraud investigators predict that the number of cases will increase. Fraudsters are preying on people who took out adjustable rate mortgages to get into a house and are now facing foreclosure as their rates reset and they can no longer afford their payments.

Homeowners who are having financial trouble need to be very careful of cold calls or letters from people who purport to be able to get rid of their debt, says Matt Schwartz, a New Jersey-based CPA and certified fraud examiner. "Where consumers have to be really careful is if someone comes to them and says, 'I know you're having trouble. I can help you out; sign these papers,'" Schwartz says. "They're getting you to sign over your property to them and they sell it."

His advice: Never make any kind of deal over the phone or under pressure. Take any papers to your attorney to review, and never sign any papers where information is left blank.

One final word to borrowers who are tempted to lie on mortgage applications, you're not doing yourself any favors trying to qualify for a house you can't really afford. And there's probably another mortgage out there that you would have qualified for.

"Some people may think the only way they can get into a property is to BS the bank all the way through," says David Reed, president of CD Reed Mortgage Bankers of Austin, Texas, and author of "Mortgage Confidential." "There are so many programs out there. I've never met a borrower who couldn't get a mortgage."

 Pat Curry is a freelance writer based in Atlanta