But authorities contend that instead of buying such properties legally, the two men tricked people who had fallen behind on their mortgage payments into transferring their home titles to them. In an indictment handed down Thursday, a federal grand jury alleged the men didn't make mortgage payments on properties they acquired, but used a variety of methods - such as filing for bankruptcy - to stave off foreclosure while raking in money from renting out those homes.

Schemes like these, authorities say, are too common in Utah, one of the mortgage fraud capitals of the United States.

Mortgage fraud takes many forms.

In many cases, someone involved in the home-buying process does something unethical or illegal to help a buyer qualify for a home. For example, a loan officer may inflate an applicant's income or provide false financial data to ensure a loan is approved. Or an appraiser may distort the value of the property being purchased.

But in others, crooks use diverse means to rip off mortgage companies.

Sometimes, fraud artists buy properties with other people's Social Security numbers. Others participate in "equity skimming," which involves taking control of properties owned by homeowners who have fallen behind on their mortgage payments. The grand jury filed one count of equity skimming against Neusch and Davis. The men also have been charged with three counts of bankruptcy fraud for using bankruptcy filings to delay foreclosure while they collected rental income.

Neither suspect could be reached for comment.

"I had high hopes that Utah's fraud problem would have improved over the past year, but there continues to be so much of it," said Jim Croft of the Reston, Va.-based Mortgage Asset Research Institute.

Croft, who will release a state-by-state report on mortgage fraud in April, said preliminary data show that mortgage fraud in Utah did not subside in 2005 - as many had hoped. In fact, he said the state remains among the three worst states for mortgage fraud, a dubious distinction Utah has maintained for five years.

Why does Utah have such a high rate of fraudulent activity? No one is sure. One suspicion: Unscrupulous lenders try to qualify too many heavily indebted Utah families for homes they cannot afford.

In other cases, scam artists take advantage of families facing financial distress. Utah has as "unique, trusting population," said Jim Malpede, a supervisory special agent in FBI's Salt Lake City office.

The state has taken a number of steps to reduce mortgage fraud, including educating Realtors, disciplining appraisers and increasing regulation of mortgage lenders. Given all the reform efforts, Malpede said he doesn't understand why Utah's mortgage fraud remains so high.

But in one way it makes sense, he said, given the fact that other types of white collar crime are prevalent here as well.

"Pick a [type of] fraud," Malpede said, "and we'll have a higher proportion of it than many other parts of the country."

lesley@sltrib.com