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Some loans for homes are backed by US government...Fannie Mae Mortgages, VA mortages, Farm Home Mortgages, etc.
What is happening is the homes being mortgaged aren't worth what they are loaning, or loans are being given to people who really can't afford to pay them back, income ratio to debt or too much debt already, based on both incomes,etc. The Mortgage Broker is charging heavy fees, upwards of $4-5000 dollars at closing. That is the fraud...these mortgages will not be paid back, and these houses won't sell for amt borrowed...leaving government holding the bag and the taxpayers money lost for the guarantee on the mortgage.
A 100 of those lousy loans nets the Fraudelant Mortgage Broker almost $400,000-$500,000 dollars for his selling them the loan. Legitimate brokers are afraid to deny these loans as many are minorities,elderly or very young females...so they risk discrimination suits. So both greedy fraud brokers and legitimate mortgage brokers are breaking the taxpayers.
I don't claim to know a lot about it, but this is fairly close to what is happening as it was explained to me.

What is happening is the homes being mortgaged aren't worth what they are loaning, or loans are being given to people who really can't afford to pay them back, income ratio to debt or too much debt already, based on both incomes,etc. The Mortgage Broker is charging heavy fees, upwards of $4-5000 dollars at closing. That is the fraud...these mortgages will not be paid back, and these houses won't sell for amt borrowed...leaving government holding the bag and the taxpayers money lost for the guarantee on the mortgage.

So in this case, the fraud is being committed by mortgage brokers, who are benefiting by charging excessive fees to broker bad loans based on false statements to lenders? Okay, that makes a lot of sense. It would also make a lot of sense if real estate agents were aiding in this, since they stand to benefit even more handsomely on each bad sale if they are getting a 6% commission on $200,000+ sales.

I searched and found this information about current real estate fraud problems from the IRS:

“Property Flipping” — A buyer pays a low price for property, then resells it quickly for a much higher price. While this may be legal, when it involves false statements to the lender, it is not.
Two Sets of Settlement Statements — One settlement statement is prepared and provided to the seller accurately reflecting the true selling price of the property. A second fraudulent statement is given to the lender showing a highly inflated purported selling price. The lender provides a loan in excess of the property value, and after the loans are settled, the proceeds are divided among the conspirators.
Fraudulent Qualifications — Real estate agents assist buyers who would not otherwise qualify by fabricating their employment history or credit record.

The same page then gives several actual examples of bad actors doing these things.