Case exposes rampant mortgage fraud

The Detriot News reports:

Details of the scheme came to light late last week in the wake of the arrests and accusations that banks had been defrauded of more than $10 million.

Three FBI agents went undercover posing as buyers and sellers using homes provided by banks.

The government contends the suspects typically located distressed homes and persuaded the owners to join the scam. Meanwhile, they recruited appraisers willing to inflate the value of the property and individuals with good credit -- but often little to no income -- to pose as buyers.

Using the inflated appraisals and fake income documents, the "buyers" borrowed much more money than the homes were worth and split the proceeds among the participants.

Investigators spelled out details of their accusations in court papers late last week:

Near the top of a market this stuff happens.