Mortgage fraud through identity theft is the second most common mortgage fraud scheme. The FTC reported in 2004 that $429 million dollars in damages for home mortgage fraud hoaxed and approximately $1.1 million dollars lost on commercial loans.

Mortgage fraud through identity theft occurs in several different ways. First a person may apply for a loan for a new home or for a home equity loan using your personal and financial information. The home equity loan is most often on the house that you are residing in, thus making this the easiest hoax to commit. Knowledge of an individual's date of birth, social security number, as well as address makes it easy for victimization to occur.

Secondly, mortgage fraud may occur in a fake sale of your home. One thief will assume your identity and ?sell? the property to another thief. With mortgage loan money in hand, both thieves get away and no real sale occurs. However, there have been instances where the homeowner's identity was stolen and the home was sold to a legitimate buyer and the thief gets away with the money, the buyers have no new home and the original homeowner is left with the messy business of re-establishing his identity and his credit.

In most cases, the banks are the ones most damaged by these types of schemes. A legitimate homeowner did not take out the loan, so may not be held liable, but they don't get off with out any damage at all. Many hours and much money may be required to correct the credit problems that are a result of identity theft, particularly when the theft results in large sums of money being stolen. Then there is the additional effort to protect their future credit and personal information.

Those most likely to be victims of mortgage fraud are the elderly, established homeowners, and those who have a great deal of equity in their homes. Equity information is readily available through an online title search and the use of tracking property values in the area.

Homeowners need to do the following to protect their homes and their credit.

- Monitor your credit report, receive regular updates, and stay informed;

- Immediately contact any lenders that provide information on your credit report when you discover pieces of information that are mistakes of fact or that you don't know or recognize;

- Read your social security benefits statement when it comes in the mail to determine if anyone has already claimed your benefits.

- Be wary of communications regarding your home, real estate, personal or mortgage information including special ?offers? to help you with your mortgage or interest rate.

- You may need to educate your parents or other elderly individuals with their credit protection plans.

- Install an anti virus and spyware software system on your computer to protect your personal and financial information.

Early detection and reporting of mortgage fraud schemes is important. With mortgage fraud, consumers may lose their property, their savings, and their credit rating. Secondly, lenders are affected by the loss of money, security, and assets in their company, not to mention the lack of trust resulting from these types of rackets.

If a victim of this type of crime, it should be reported to The Federal Bureau of Investigation (FBI) http://www.fbi.gov/ (202) 324-3000 ? National FBI Financial Institution Fraud Unit. However, there are a possible 18 other government agencies, banking, consumer, and fraud reporting agencies as well as other consumer resources available to consumers depending on the type and method of mortgage fraud that occurred. For a complete list of resources, visit Mortgage News Daily http://www.mortgagenewsdaily.com/Mortgage_Fraud/National_Resources.asp

Consumers can try to stop identity theft before it happens by being forewarned and vigilant. If you are a victim of identity theft, in particular mortgage fraud you will have the information you need to correctly and quickly report the theft and take the steps necessary to begin to repair your credit.