Real Estate Fraud: How to Spot a Scam

Real estate and mortgage fraud cases may be the latest fallout from the recent real estate bubble. Two recent California court cases demonstrate the lengths that white-collar criminals will go to in order to deceive buyers, banks and investors.

In Orange County, a former real estate broker stole clients' identities, forged signatures and falsified documents with two other suspects in order to obtain loans -- and then stole the funds. According to the Los Angeles Times, another fraud case involved a Hermosa Beach real estate investor who recently pleaded guilty to defrauding clients of more than $7 million,

Mortgage fraud is not a new scheme. White collar criminals have long devised elaborate scams to defraud buyers and banks of loan money. A November 2009 Maryland case, resulting in a 42-month jail term for Terrence White, involved White and others paying "straw buyers" $10,000 to purchase properties. False mortgage and settlement documents were created resulting in more than $19 million in loans. Most of the funds have not been paid back and the properties have gone into default.

But if banks and other lenders are not savvy enough to see through these scams, how can consumers?