“The Colorado Association of Mortgage Brokers submitted a plan last week to regulate the industry in Colorado, one of just two states with no such requirements on the books.” They believe that regulation [may stem some of the fraud [Pueblo Chieftain]](http://www.chieftain.com/print.php?article=/business/1129961513/2) In every scam, one of the parties to the fraud in that state is usually a mortgage broker.

They list types of mortgage fraud are (in no particular order of importance) as:

* Equity Skimming — The mortgage broker qualifies the consumer for a larger loan then they need, quitclaims the property to the mortgage broker who rents the house back to them and then the mortgage broker does not pay the mortgage.

* Inflated appraisals — Overstated appraisals are usually done by appraisers who depend on a few mortgage brokers for business. The lender has less collateral then they think. The borrower has debt greater than the value of the house. Sales of properties in the neighborhood may be influenced by a few above market sales.

* Flipping — The mortgage broker works with an appraiser to create a false identity for a borrower and artificially inflate the value of the property multiple times within a short period. These closed sales appear in public record and are also used by unwitting appraisers.

* Silent second — The seller provides a non-disclosed (to lender) down payment to the buyer as a gift. The buyer doesn’t realize that they have to pay taxes on the gift and can’t afford the house.

* Air loans — Providing mortgages on properties that do no exist.