Particularly brilliant hucksters manage to combine and pull off serial land and mortgage frauds that can bilk private investors and financial institutions alike out of millions. Two such alleged fraudsters were a couple living in Florida, Natalia and Victor Wolf.CNBC's "American Greed: The Fugitives" reports on the notorious "developers" who vanished after their investors lost millions.
At the end of the housing boom, the Wolfs allegedly were engaged in every known type of mortgage fraud, said Roman Groysman, an attorney representing lenders in a lawsuit against the couple. "If one could teach a course on complex mortgage fraud and match it up against the allegations against these two individuals, I think there'd be little left to cover," he said.
"None of the lenders knew … there were other lenders," FBI Special Agent Kurt McKenzie told CNBC. As authorities and investors began to close in on the Wolfs, the couple managed to quickly mortgage their opulent home—over and over again. There were private cash lenders, small business lenders and financial institution lenders. "By the time all was said and done," said McKenzie, "there were at least four to five loans, mortgage loans, on [the Wolfs'] house."
But when authorities went to the mansion looking for the couple, they found empty champagne bottles. The people who lost money by trusting the Wolfs have never been able to confront them. Unconfirmed reports place the couple at large in Moscow.
(Read more: Mortgage alert: Borrowers change how they cheat)
Upcoming changes to regulations may—or may not— affect rates of mortgage fraud. In January 2014, the Consumer Financial Protection Bureau will enforce new mortgage regulations that emphasize loan and borrower quality. "Under the new regulations for Qualified Mortgages," said CFPB spokesman Samuel Gilford, "certain loan features are not allowed any more, for example, balloon payments or interest-only loans or mortgages that last for over 30 years." The new Ability-to-Pay rule says borrowers must conform to a clear standard, and lenders will have to verify and document the lender's ability to repay. The no-doc loans of the past, says Gilford, "were much more vulnerable to fraud."
The latest fraud-detection tools are two new indexes in the Lexis-Nexis Annual Mortgage Fraud Report, which is available for public access: a foreclosure index, added this year, and an index of potential collusion activity, which makes its second appearance this year. The two new indexes join the on-going index of verified mortgage fraud and misrepresentation
The potential for collusion is an important new index because in recent years, data analysis shows an increase in collusion involving multiple industry professionals. (The Collusion Indicator Index reports on the factors that make collusion possible or likely; not actual collusion.) "What the industry has found," Jennifer Butts, one author of the Lexis-Nexis report, wrote in a recent email to CNBC, "is that these indicators—properties transferred at a loss between known relatives or associates—is often an indicator of suspicious activity."
The more indexes a state appears on, according to the report's authors, the more "challenging" are the state's financial prospects for the coming years. New Jersey is the only state to appear on all three indexes. Five states—Florida, Nevada, Illinois, Georgia and Ohio—appear on both the Mortgage Fraud Index and the Volume of Foreclosures Index. And New York and Delaware appeared on both the Mortgage Fraud Index and the Collusion Indicator Index.
Drilling down into the data reveals even more geographic information: For loans originating only in 2012, five "metropolitan statistical areas" represent 35 percent of all 2012 SARs.
—By Celia Watson Seupel, Special to CNBC.
CNBC follows the money trail in search of the most wanted white-collar fugitives."American Greed: The Fugitives" airs Thursdays at 10 p.m. ET.