In a recent report, Minnesota ranked alongside the West Coast and Las Vegas as areas with high mortgage-related fraud.
Those areas had all experienced an appreciation in real estate values that spiked higher then the national average. The problem was that once the boom turned to bust, a lot of the fraud normally hidden began to surface.
"In markets that were rapidly appreciating, it was easier to flip houses," said Rick Thornton, Assistant Special Agent in Charge of the FBI.
"People wouldn't look closely at why is this house worth so much more than it was six or eight months ago when it sold?" he said.
Thornton said, in general, mortgage fraud works as an evolving cycle and can be broad and complex.
It can range from a borrower putting false information on a mortgage application to an investment scheme that involves millions of dollars.
Amber Hawkins of the Legal Aid Society in Minneapolis said she's seen cases where individuals and groups get other people to buy property for them as a so-called investment.
"The property gets put in this other person's name, not the scammer's name, and then they figure out a way to take out some cash when they purchase the property," she said. "The scammer walks away with the cash, the mortgage goes into default, and now this person is stuck with this property in their name."
One national mortgage analyst breaks down the cycle into two waves: first it's the fraudulent mortgage; second, predators move in to take advantage of those who are in foreclosure or default. For instance, bogus credit counselors promise to save a person's investment or home for a fee and then skip town.
Bert Ely, a banking consultant in Alexandria, Virginia predicted it will be years before the market rebounds.
"Even in a period where housing prices are flat, they're still going to be a lot of people that are going to have mortgage problems," he said. "They will get caught up with a mortgage rescue or frauds that have not yet come to the surface. They will be surfacing over the next couple of years."
Rick Thornton of the FBI said even though there have been many investigations and prosecutions of mortgage-related fraud, there will be many more before the cycle runs its course.
"We'll continue to see foreclosures and loan defaults on properties that were financed a year ago, two, three, four years ago and so forth so we're going to see cases, from an investigative standpoint, present themselves on that," he said.
The FBI said there are probably other reasons why Minnesota scored high in government's mortgage fraud list. One may be that people here are reporting fraud more often than people in other places.
The FBI put the losses to homeowners and other borrowers who were victims in the schemes at over $1 billion.