WASHINGTON — The once-booming housing market and rising popularity of nontraditional home loans have produced an unwanted byproduct: a 35 percent increase in suspected mortgage fraud.

A new report by federal regulators indicates the fraud is being perpetrated by people seeking to buy homes or others in cahoots with brokers and agents who cheat the system.

The Treasury Department's Financial Crimes Enforcement Network, known as FinCen, on Friday released its first report on mortgage loan fraud, which is said to be one of the fastest-growing white-collar crimes in the country.

The agency undertook the review after seeing a significant rise in the number of so-called suspicious activity reports — forms most often used to report suspected money laundering — that it received from U.S. banks concerning mortgage loan fraud.

The sample of 1,054 reports reviewed by FinCen came from financial institutions in all 50 states, the District of Columbia, Puerto Rico, Guam and American Samoa. The highest incidences of suspected mortgage fraud in 2005 were in California, Florida, Georgia, Illinois and Texas.

FinCen found that suspected mortgage fraud as measured by reports filed continues to grow, rising by 35 percent in the first quarter of this year from the January-March period in 2005 — possibly because of "increased awareness of the potential for fraud in a dynamic real estate market."

Although growth in the housing market appears to have cooled this year, "opportunities for fraud are still present," FinCen's study says.

The use of false statements by prospective homebuyers and identity theft were cited in a number of the reports banks filed to FinCen.

Mortgage fraud poses a growing risk to banks and other lenders, it says. Federal banking regulators have said that mortgage fraud is growing because it can be very lucrative and fairly easy to perpetrate, especially in areas where home prices have been rising rapidly.

While some people engage in mortgage fraud because they want to qualify to buy a home by inflating the value of their assets, others who use more sophisticated schemes are driven purely by profit motive and have no interest in the property for themselves. Mortgage fraud often involves the loan application process or the property appraisals required for mortgage approvals.

Increasingly popular unconventional loans, which let borrowers obtain mortgages with less documentation of their income and assets, can inadvertently facilitate fraud.

And the growing use of the Internet and telephone to process mortgage loan applications means that lenders may never meet borrowers, enhancing the potential for fraud.