Shop around and don't be afraid to get a second opinion. Builders who insist on using a specific mortgage company and title company may have ulterior reasons, LeDoux said.

Finally, don't be rushed. Ask for loan papers a day in advance of closing and have them looked over by another loan officer for any possible signs of fraud.

Mortgage fraud has more than just an impact on the individual homebuyer, affecting entire neighborhoods and the lending market itself. Foreclosures can drive down the value of homes in a surrounding area, and interest rates can go up.

"We're paying more because we are a higher risk for loans from investors," said Rep. Paul Ray, R-Syracuse, who has worked to combat mortgage fraud through legislation.

Ray said the good news is that a cooperative effort of local, state and federal law enforcement has led to catching more fraud. Recently, this has resulted in better interest rates for Utahns.

Because Utah has dropped from No. 1 to No. 7 in the nation for fraud risk, Ray said interest rates have dropped a quarter of a percentage point.

What this means is that for a $150,000, 30-year mortgage, a monthly payment drops from $852 at 5.5 percent to $828 a month at 5.25 percent. Over 30 years, that is a $9,000 savings.

"Now that the housing market is booming, I think there's a real opportunity for people to find new ways to beat the system. I expect to see an increase in mortgage fraud," Malpede said. "We have made progress, yes, we've made progress, but have I seen a slow down in cases coming across my desk? No, not really."

FBI numbers for suspicious activity reports in Utah in 2004 reached a record 153. So far, 2005 reports have already doubled the number of reports in 2002 with five more months to go.

Ray said much more needs to be done to push Utah even lower in the ranking. In particular, the need to consolidate the regulation of the home mortgage industry. "Builders are under the department of professional licensing, title companies are under the department of insurance, and loan officers are under the department of real estate," Ray said, adding many fraudulent operations bank on the fact that three state agencies probably can't efficiently regulate against fraud.

Ray said the new alliance between state agencies, the FBI and local law enforcement will continue to work on fighting lending fraud. Their work has already resulted in the prosecution of several individuals and has shut down several fraudulent mortgage operations, Ray said.

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E-mail: gfattah@desnews.com