MILWAUKEE — America's booming mortgage industry has proved ripe for criminal pickings. Cases of mortgage fraud are mounting.

The financial toll is reaching "tens of millions of dollars each year," although the actual damage is "unknown and probably unknowable," said William Matthews, vice president of Mortgage Asset Research Institute.

Losses hit consumers, lenders, investors and neighborhoods, said one industry expert, in any combination, depending on the scam.

As of last September, 533 FBI mortgage fraud investigations were under way, up from 102 in 2001, according to a Mortgage Bankers Association analysis released in January.

The report said that by last September banks had reported 12,100 cases of suspicious financial activity for the year, compared with 4,220 in all of 2001.

"We're seeing more incidents reported every year, and it's getting more egregious, in terms of losses," Matthews said.

Matthews, co-author of an annual mortgage fraud report for the Mortgage Bankers Association of America, sees the crime spree as tied to the market's heady growth — now nearly triple its $1 trillion size in 2000.

His reports don't calculate dollar losses, which he said victims are loath to disclose, and complaint volume is kept confidential. Despite the very private nature of his work, Matthews agreed to share his insights.

Insiders are the main culprits, Matthews said.

"There's fraud for commission, where a professional such as the mortgage broker, banker, realty agent or appraiser changes documents in order to get a commission," Matthews said. "This results in a loss to lenders.

"Then there's fraud for profit, where the con artists are people in the know — mortgage bankers, brokers, real estate agents, appraisers — are ripping off the system. Some of their schemes are just outrageous."

Borrowers rarely fleece the system.

"Oh, maybe they get their employer to fudge some numbers for them or get a relative to report a second job that they don't really have," he said. "But what they do usually doesn't result in losses. After all, if you cheat to get your home, you'll probably give up a lot to keep it."

It's a shameful sign of our times, said David Callahan, research director at the public policy group Demos in New York, and Tim Doyle, director in government affairs for the Mortgage Bankers Association.

"This is just another area in American life where a boom, with all its money to be made, brought out the worst in us," Callahan said. "The carrots for cheating are getting bigger and even though the sticks are hitting harder, our watchdogs are asleep, so it's easy to get away with things."

The carrots sure are getting bigger.

The mortgage-loan origination market shot up from $1 trillion in 2000, the start of a refinancing tidal wave borne of super-low interest rates, peaking at $3.8 trillion in 2003 before subsiding last year to $2.7 trillion.

"The housing market's been very active, and property values have risen very quickly, so there's a sense that there's a lot of money out there to be had," said Doyle. "I'm shocked by how many reports there are every day around the country about fraud convictions or indictments."

Too bad the mortgage industry has no single federal agency monitoring its affairs, industry experts said. Government regulation is splintered and in some cases — notably mortgage brokers — almost nonexistent.

"You can be driving a truck or selling cars today and tomorrow be a mortgage broker dealing with large sums of money," Matthews said. Consider events of recent weeks:

Federal housing regulators disclosed investigations into alleged scams across the nation involving illegal kickbacks from title insurers to lenders, realty agents, builders and developers sending them customers.

The U.S. Department of Housing and Urban Development settled cases in Texas and Oklahoma for nearly $7 million. Meanwhile, Colorado and California are pursuing state charges against title insurers and their cronies operating there.

Fannie Mae, the nation's largest mortgage financier, paid $7.5 million to federal regulators for not speaking up while crooks sold what it knew were bad loans to a competitor.

The Office of Federal Housing Enterprise Oversight now wants to impose a four-day reporting mandate on Fannie Mae and its fellow government-sponsored enterprise, Freddie Mac, regarding any known or suspected fraudulent activity.

Warning that millions of dollars are being siphoned from the mortgage market via money-laundering schemes and fraud for profit, the Mortgage Bankers Association launched an online anti-fraud center, mbafightsfraud.mortgagebankers.org, which will carry public information on mortgage crimes and punishments plus password-protected security alerts to its members.

Demos issued a report warning that conflicts of interest pervade the home-loan trade, where inflated property values have delivered handsome benefits to lenders and real-estate agents, leaving homeowners to discover their dearth of equity.

Written by Callahan, the report suggested that some of the $450 billion in home equity that homeowners cashed out during the 2001-2004 mortgage-refinancing boom was based on exaggerated home values caused by the common practice of muscling appraisers into pricing a property to "make that deal."

Some trade groups — notably appraisers and mortgage brokers — have urged regulators for stronger governance to roust their wrongdoers.

Alan Hummel, government-relations chairman of Appraisal Institute, a nationwide professional group headquartered in Chicago, backs more sweeping change, as proposed March 15 in what's called The Responsible Lending Act.

The legislative proposal, authored by Reps. Bob Ney, R-Ohio, and Paul Kanjorski, D-Pa., establishes a mortgage-broker registry and addresses improper pressures on appraisers, Hummel said. His trade group has endorsed the act, which critics decry as establishing lower standards than many states.

Some remedy is needed soon, Callahan said.

"Housing is a more important part of our economy than it's ever been, and people's fortunes are tied to mortgaged properties," he said. "We could never nail down the connection between fraud and high real-estate prices, but it seems intuitive. All you need is for that bubble to pop. If interest rates go up and maybe the economy takes a wrong turn, we could have economic catastrophe."

Much of the law breaking is known but not openly discussed.

"Fraud is America's little mortgage secret, and it's scary," Hummel said. "It touches those who know it's occurring and those who don't even suspect it."