Mortgage scam suspect arrested

NEW YORK (Fortune) -- Alleged master con artist Matthew Bevan Cox was captured within the last 24 hours at his home in Nashville, Tennessee, according to the U.S. Attorneys office in Atlanta. He was running a business called the Nashville Restoration Project.

A source familiar with his domestic situation turned him into federal agents. Authorities have him in custody in Nashville, and he will likely stand trial in Atlanta, where he faces a 42-count indictment carrying a 400-year jail sentence.

Matthew Bevan Cox

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For the better part of the past decade, Cox has stalked his prey through MLS (multiple listing service) real estate ads. Authorities suspect he has stolen at least $15 million through fraudulent mortgages, although the figure could be much higher. His victims have been forced to pay tens of thousands of dollars to lawyers to save their property from foreclosure on unpaid fraudulent loans.

In "Real Estate Scammers," Fortune chronicled the six-state crime spree in which Cox enlisted help from Rebecca Marie Hauck after they met on Match.com. Read the story.

Since the housing market started to soar in 2001, mortgage fraud has become the fastest-growing white-collar crime, according to the FBI. Last year, crooks skimmed at least $1 billion from the $3 trillion U.S. mortgage market.

Now that the market is slowing, fraud is only rising. As business dries up, there's increasing pressure on lenders, brokers, title companies and appraisers to be profitable. That means loan and title documents aren't scrutinized as carefully as they might be, and courts can't keep up with the volume of paper. Then there's the mad rush by many to sell, particularly by people who paid high prices for homes, and suddenly can't afford the mortgages.

It's like a tasting menu for con artists, so tempting that in some cities drug dealers have turned to mortgage fraud. Here are three types of mortgage fraud and how they work.