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It's official: Utah is the mortgage fraud champion of the United States.

After years in the top five, the state overtook Florida to move into the No. 1 spot based on 2006 data compiled by the Mortgage Asset Research Institute (MARI), which will release a report on home-loan fraud in mid-April. The company, part of information services company ChoicePoint, is a clearinghouse for fraudulent home-loan activity reported mainly by mortgage lenders.

On a per-capita basis, Utah has 2 1/2 times the national average of loans containing alleged fraud or serious misrepresentation, said Jim Croft of MARI. In the category of subprime loans made to people with marginal credit, the rate of fraud is even worse - three times the national average, he said.

The state's dubious distinction is bad news for consumers. Utah lenders say residents pay more for their home loans - about one-quarter of a percentage rate higher - than people in other parts of the country because of the high level of fraud and increased risk of default.

"Unfortunately, Utah has quite a reputation for mortgage fraud now," Croft said, noting California also has moved up the list from No. 8 to No. 3.

Those leading efforts to curb this type of crime say the ranking is discouraging.

"It's disappointing and embarrassing to see Utah in the No. 1 position," said Derek Miller, director of the Utah Division of Real Estate.

MARI is the most comprehensive collection agency for mortgage fraud. The agency collects data not only from cases of fraud being pursued by legal and regulatory agencies, but those not reported to authorities.

Mortgage fraud takes many forms. A buyer lies on a loan application. A mortgage lender inflates someone's income so they can qualify for a loan. A crook uses someone else's Social Security number and uses it to buy a home.

In one recent case, several Latino families said they thought they were buying a home when they actually were signing a long-term lease agreement with only an option to buy the home sometime in the future.

The complex nature of such cases makes it difficult to pursue them.

No one is sure why Utah has such a high rate of fraudulent activity. One suspicion is that unscrupulous lenders try to qualify too many heavily indebted Utah families for homes they cannot afford. Another is the makeup of Utah's trusting population, where many people place a great deal of trust in community, religious leaders and authority figures.

Jim Malpede of the FBI in Salt Lake City said he still is trying to figure out why Utah's rate of home loan fraud is so high. He said he is not surprised by Utah's No. 1 ranking.

"Mortgage fraud has been rampant here for years," he said.

One common type of fraud he is seeing now involves crooks who pay another person - a ''straw'' buyer - for use of their identity to buy a home because they cannot qualify themselves.

Many homes purchased by straw buyers end up in foreclosure. That is because crooks often obtain inflated appraisals, which enable them to tap tens of thousands of dollars in equity - a scheme called equity skimming. After taking out as much cash out of the home as they can, they disappear, and in many cases the property ends up in foreclosure.

The state has made some efforts, some at the legislative level, to rein in fraud.

In the past session, state regulators pushed the passage of Senate Bill 199, sponsored by Sen. Sheldon Killpack, R-Syracuse, designed to curb the growing amount of fraud committed by people who act as mortgage loan providers, real estate agents and appraisers without a state license.

Under current law, the Utah Division of Real Estate can only take action against licensed loan providers, agents and appraisers. Those people can be fined and their licenses can be taken away, depending on the severity of the offense.

But many of those who scam consumers now are not licensed. SB199 allows the division to fine those who misrepresent themselves as real estate professionals. Fines can be assessed up to the amount they profited from the fraud.

The measure is one of the changes initiated by the Utah Division of Real Estate in recent years. Under legislation passed, lending managers who supervise mortgage loan officers are required to obtain a license and be accountable for the lending officers they supervise. All loan officers must now be affiliated with a supervisor.

That measure went into effect in May 2006, building on an earlier law that went into effect in 2004 that required mortgage lenders and companies to obtain a license by the state and pass an exam.

Miller of the Utah Division of Real Estate said he was eager to see the report when it is released in April as part of his efforts to help push fraud levels down.

The good news, he said, is that Utah no longer leads most states in foreclosures and delinquencies.

"If the trends remain true, we should see the trend in actual cases of reported mortgage fraud starting to decrease," he said. "That's typically the trend."

He also is hopeful increased regulation will begin to have a larger effect.

"The state has proactively taken steps to go after mortgage fraud," he said. "It takes a while to clean up the industry."

COMMON TYPES OF MORTGAGE FRAUD

Application fraud: Buyers lie on a loan application or supporting documents to ensure they qualify for a home loan, or so they can borrow a larger amount of money.

'Straw' buyers: Crooks use someone else's identity to obtain a mortgage and can pursue a related type of fraud called equity skimming, in which they cash out of any equity in the property.

Lender fraud: Lenders want so badly to make a loan, they lie on a loan application to ensure it will be approved.

Lease scams: Buyers may think they are getting a home but are actually signing long-term lease agreements with an option to buy the home sometime in the future.