Sometimes being No. 1 in the nation isn't such a good thing.

In 2001, the FBI listed Utah as No. 1 in the country for the amount of mortgage fraud cases reported. But this ranking means more than just a black mark for the state, it also has resulted in higher interest rates imposed by lenders due to the high-risk environment.

With a boom in the U.S. housing market, the amount of mortgage fraud has also begun to rise nationwide.

Anti-fraud officials see it as a "blood-in-the-water" trend — where the money is, the crooks tend to gather. What this means for homebuyers is a risk of ruining their credit, or worse, losing their homes and the equity they've worked years to build for retirement.

According to the FBI, Utah loses millions due to fraudulent loans. From schemes called "flipping," where a property is continually refinanced to rack up fees, to "straw buyers" in which people's identities are used to take out fraudulent loans, unscrupulous lenders have various ways to bilk banks and homeowners alike.

But a team of state lawmakers, state anti-fraud agents and federal agents have been working to fight this elusive form of fraud and, in turn, improve Utah's image among lenders.

"Now that our housing market is booming, I think there's a real opportunity for people to find new ways to beat the system," said FBI special agent Jim Malpede, who specializes in financial fraud.

Malpede said it is difficult to say what attracts unscrupulous mortgage brokers to Utah, but he said it could have something to do with the state's poor history of state regulation or the fact that Utah is also listed by the FBI as a hotbed for other types of white-collar crime, such as investment fraud.

But state officials have stepped up, and last year they changed licensing requirements for mortgage brokers in an effort to weed out fraudulent lenders.

"They've definitely made a very good effort in changing state legislation and regulatory oversight of the industry," Malpede said.

"We've had some pretty high rankings, and we still rank unduly high," said Dexter Bell, director for the Utah Division of Real Estate. "It's a lot, lot better, but we're still too high. We're now tied for seventh in the nation."

Legislation now requires mortgage brokers to be registered and bonded, much like their bank loan officer counterparts.

One major change is the requirement of testing for mortgage lenders in Utah. Bell said last year, his division tested thousands of mortgage lenders.

The 2 1/2-hour exam gauges an agent's knowledge of federal laws, lending practices and state law. Bell said 7,000 lenders passed the test, about 1,000 failed and about 4,000 didn't bother to take the test and simply walked away from doing business in Utah.