Real estate fraud continues to grow, despite aggressive responses from federal regulators.

The Federal Bureau of Investigations has reported that incidents of mortgage fraud have tripled over the last two years to 21,994, with the value of the crimes quadrupling to $1.01 billion.

The crimes range from individuals lying on their applications to complex rings of identity thefts, straw buyers and appraisal fraud.

Harvard Law School professor Howell E. Jackson, who authored a study of mortgage brokers and yield spread premiums, blames the anonymity of the mortgage business. Thirty years ago, applicants went down to their local bank and dealt with a loan officer who they probably knew. Today, the business has grown and changed and most buyers never talk to a lender. Instead, they rely on a broker to get them the best deal.

Jackson estimated that brokers will earn an estimated $33 billion in commissions this year.

“People should ask their broker how much they’re making, including both yield spread premiums and direct fees, and if it’s over $2,000 they should question why,” says Jackson. “No one says the broker has to make a certain amount. It’s negotiable.”

Source: Los Angeles Times, David Streitfeld