Primer on mortgage mess

If you're still a little confused about the particulars behind the housing collapse, check out last week's edition of "This American Life" that's titled "The Giant Pool of Money." It's a little simplistic in some places, but they do an excellent job of connecting many of the mortgage dots - as well as putting human faces (or voices) behind the various steps of the disaster. Looking back on those days, it’s still hard to believe some of the stuff that went on. I mean, what banker in their right mind would agree to something like a NINA loan (No Income No Asset) that was available to most anyone with a pulse? One guy who borrowed $540,000 said in amazement: "I know criminals who wouldn't loan me the money - and they'll break your knee-caps." Of course, the financial world had become like dope addicts looking for deals wherever it could - no matter how absurd those deals happened to be. And the brokers and other middlemen kept pushing.

By the way, financial institutions reported a 31 percent increase last fiscal year in what's known as Suspicious Activity Reports, many of which are presumed to involve mortgage fraud. As you might expect, California was in the Top 10. These and other factoids are in a new FBI report.

The downward trend in the housing market provides an ideal climate for mortgage fraud perpetrators to employ a myriad of schemes suitable to a down market. Several of these schemes have emerged with the potential to spread as the recent rise in foreclosures, depressed housing prices, and decreased demand place pressure on lenders, builders, and home sellers. Emerging and re-emerging schemes for 2007 included builder-bailouts, seller assistance, short sales, foreclosure rescue, and identity thefts exploiting home equity lines of credit.

The OC Register's Mathew Padilla suspects that mortgage fraud might have peaked in 2007 because there's so much more scrutiny these days by lenders. No more NINA loans.