The current real estate market conditions provide an excellent backdrop for mortgage fraud.

• Buyers trying to get into the market before interest rates climb much higher are tempted to cheat to get what they want.
• Those same rising rates create financial woes for homeowners with adjustable rate mortgages who may be enticed to bend the rules to get out of a bad situation.
• Sellers unable to find ready and financially able buyers may be the unwitting targets of fraudsters who offer them a way out.

As long as the market stays in the doldrums, mortgage fraud will continue to thrive, say experts. It can creep into any neighborhood and hurts not only buyers, sellers and lenders, but even neighbors.

Ann Fulmer learned all about it when she found it in her Atlanta neighborhood. She knew something was fishy when she started noticing unusual activity nearby.

The real estate market in her area had been stagnant for awhile before the 1996 Olympics, says Fulmer. Houses had been on the market for a while with reduced prices.

Suddenly, houses were bought and resold in a day for $150,000, $200,000 or even $300,000 more than the asking price. Then she started noticing that the people who had paid half a million dollars for a house were showing up "driving 1972 Pintos and (with) everything they owned in Hefty bags." Other houses that were sold were never occupied.

A former radio news reporter and criminal prosecutor, Fulmer may have looked like any other stay-at-home mom, but for the mortgage fraudsters preying on her neighborhood, she became their worst nightmare. Bewildered, she started poking around. "I spent mornings while my kids were at Mommy's Day Out down at the courthouse," she says. "I started to see the same name on the deeds."

What she found was mortgage fraud.