I've yet to hear of any widespread loan fraud in Massachusetts, even as the subprime mortgage loan crisis threatens our economy. Mostly, it seems as though the typical borrower took out a mortgage loan that ended up resetting to a rate that he or she could no longer afford.

Not to say that illegal activities haven't happened.

Many experts have concluded that the nation's real estate boom of recent years was fueled in part by weakened lending standards that sparked excessive demand and drove up prices. Now, some are worried that the looser standards may have permitted a boom of another kind &8212; a big expansion of mortgage fraud.

In some neighborhoods, mortgage fraud became so extensive that it drove up overall home prices.

As a result, whole neighborhoods are now seeing rapid declines in home values.

In this climate, industry people say, fraud of two types became easier.

A more insidious type &8212; "fraud for profit" &8212; also spread. Involving scam artists taking advantage of the looser standards, many of these schemes drew in corrupt appraisers willing to overstate the value of properties, "straw buyers" who were paid to lend their names and credit histories to a transaction, and closing attorneys who kept banks in the dark.

Again, I've yet to hear of this sort of thing happening in Massachusetts ... but I'm sure our local crackerjack reporters will soon be on the hunt for this developing story!

Thanks to Richard for the story lead.

More: Housing Boom Tied To Sham Mortgages: Lax Lending Aided Real Estate Fraud - By David Cho, The Washington Post