According to Freddie Mac, mortgage fraud costs consumers and mortgage lenders in the U.S. billions of dollars each year. The following are examples of several mortgage fraud schemes that range in complexity and target both buyers and homeowners.

Identity theft

According to the Federal Trade Commission (FTC), identity theft is when someone uses the personal information of someone else without them knowing – anything from Social Security numbers to credit card numbers. Scammers can use this information to obtain mortgage loans or impersonate home sellers.

Home title fraud

Home title fraud is a combination of mortgage fraud and identity theft, according to the Better Business Bureau (BBB). Con artists find a home to steal, then impersonate the homeowner, using their name and personal information found online. They may create various fake IDs and purchase forms to transfer the title. The FBI explains that this can be done with homes that are lived in or vacant homes.

Foreclosure rescue

Scammers in this scheme target people facing foreclosure, explains Freddie Mac. In some instances, scammers may get help from someone with industry knowledge.

The scammer tells the homeowner that they can help pay off their mortgage and that they won’t lose the house. Additionally, homeowners may be advised not to speak with lawyers or other mortgage lenders, says the National Foundation for Credit Counseling (NFCC).

There are a couple of ways con artists make money in the foreclosure rescue scheme:

Rent-to-buy

In this scheme the homeowner transfers ownership of the house to the scammer, explains the NFCC. In return, the scammer says they’ll cover the outstanding mortgage payments. The homeowner then pays the scammer back in “rent,” believing they’ll eventually buy back the house. According to the FBI, the scammer instead collects the money, evicts the homeowner and sells the house for an additional profit.

Collect and vanish

According to the NFCC, “collect and vanish” begins when the homeowner pays an upfront fee to a scammer who claims they can quickly find a buyer. Or for a fee, the scammer says they’ll work out a favorable deal with the mortgage lender. They may even talk the homeowner into making mortgage payments to them directly, according to the Journal of Forensic & Investigative Accounting (JFIA). After a few months, the scammer will stop returning the homeowner’s calls and ultimately disappear with the money they collected.

Home equity conversion mortgage (HECM)

An HECM, explains the U.S. Department of Housing and Urban Development, is a way to use your home’s equity as a line of credit, for fixed monthly withdrawals or both. It could even help pay for a primary home. Homeowners have to be at least 62 years old to be eligible for HECMs.

JFIA says that HCEM scammers buy foreclosed or abandoned homes through “straw buyers.” A straw buyer is typically someone with good credit whose name is used on the loan but who doesn’t live in the home, says the Department of Insurance, Securities and Banking (DISB). Sometimes the straw buyer is bribed, or their name is used without their knowledge.

The scammer then offers the home for free to an unsuspecting senior citizen, according to the FBI. They may be targeted through TV or radio ads, billboards or even churches. Once they’ve lived in the home for 60 days, the scammer will help them get an HECM with a fraudulently high appraisal, says JFIA.

Equity skimming

Equity skimming is when con artists target homeowners having financial problems, according to the FTC. They may promise to find someone who’ll buy the home and convince the homeowner to sign over the deed. Once this happens, scammers will rent out the home for a profit and allow the home to be foreclosed on. Unfortunately, adds the FTC, transferring the deed doesn’t mean the homeowner is no longer off the hook for the unpaid mortgage.

Builder bailout

Builder bailout schemes often happen in a tough housing market, according to Freddie Mac. Builders take out loans to fund housing projects. They try to sell enough homes to pay back the loan and make a profit. If they don’t sell enough homes and can’t pay back the loans, they may resort to fraudulent activity. Bailout schemes come in many forms, says Freddie Mac. Many involve convincing homebuyers or investors to purchase the property through false promises. For instance, they may advertise closing cost assistance or no money down promotions. They may tell investors that they’ll offer property management services, but then renege on the agreement.

Illegal property flipping

According to the FBI, this type of fraud occurs when a purchased property is appraised at an inflated value and immediately sold. An appraiser is often involved in the scam, and the home is valued for improvements that never took place.

JFIA notes that illegal flipping schemes can involve straw buyers, industry insiders and identity theft. Usually, no real estate agents are involved in the process.

Income fraud

This is one of the most common mortgage fraud schemes, says the American Land Title Association (ALTA). Income fraud is simply when a buyer lies about their level of income and debt to obtain a mortgage loan. They may inflate their salary, make up an employer or fabricate pay stubs.

Occupancy fraud

Occupancy fraud is when an investor takes out a loan on a home but says it’ll be used as a primary residence, according to the ALTA. This gets them a lower interest rate and down payment than if they had applied as an investor.

On the flip side, says ALTA, occupancy fraud can happen if the buyer says they plan to rent out the property. The potential rental income helps the homebuyer qualify for the loan. Instead of renting it, however, they use it as a primary home.