In order to reduce the growing number of mortgage fraud occurrences, the FBI has been conducting undercover investigations in an effort to combat this problem.

According to the a recent report by the FBI, appraisal fraud was the most prevalent form of mortgage-related fraud, followed in order by property flipping, straw buying and identity theft.

"Mortgage fraud really took off a couple of years ago when interest rates began dropping and there was a run on refinancing," said Chris Swecker, assistant director of the FBI Criminal Investigative Division. "The problem continues to escalate, but we're working to get out in front of it. By its nature, mortgage fraud needs insider involvement, so we're finding that undercover operations are highly effective."

The FBI had over five times as many mortgage-fraud investigations last year as it did four years ago, while the IRS doubled its amount of such investigations between two and four years ago.

Recently, appraiser Dave Hansen of Washington state was sentenced to 18 months in prison after being convicted of making inflated appraisals. Hansen was also ordered to pay $287,796 in restitution to the borrowers, who ended up in foreclosure and bankruptcy after it turned out they owed more money than their property was worth. Hansen was not alone in getting sent to the big house by this Spokane, Wash., court. Mortgage brokers Dale Gibbons and Ronald Burger received terms of five years and 37 months, respectively. Both must pay over $400,000 in restitution. Real estate agent Sally Gibson must serve 30 months in prison and pay $264,000 in restitution. Closing agent Cathy Patrick is in for 60 days and out $148,340 for her part in this scheme.

This is only one recent example of appraisers, mortgage lenders, real estate agents and closing agents paying a severe price for being involved in mortgage fraud schemes.