WSJ reports that $1 billion loss in mortgage fraud was claimed. This Virginia episode is only a recent example of what is hitting the nation.

A lawsuit filed by Countrywide accuses the organizers of acquiring homes and then fraudulently selling them for a quick profit to the Virginia borrowers. Representatives of the borrowers put the total value of loans involved at about $80 million, which would make it one of the largest mortgage-fraud cases ever.

Mortgage fraud, involving loans obtained by providing false information, has mushroomed in recent years as lenders have pushed for speedier loan approvals in an effort to remain competitive and milk maximum profits from the now-fading housing boom. The Federal Bureau of Investigation reported that mortgage fraud led to losses of $1 billion in 2005, up from $429 million a year earlier. Some of the fraud that slipped through during the boom is only now starting to surface.

Attracted by the ability to obtain large sums quickly, some criminal gangs involved in drug dealing and other street crimes have branched out into mortgage fraud, says Chip Burrus, assistant director of the FBI's criminal investigative division. "It's more profitable and less risky," he says.