HOMEOWNERS who have significant equity in their homes may be well-advised to check their credit reports frequently.
That is one conclusion of a recent report from the Identity Theft Assistance Center, a nonprofit industry group, which said that identity thieves had recently begun making targets of individuals with good credit because such people often have substantial untapped home equity.
A home equity line of credit is an ideal vehicle for criminals, according to Steve Bartlett, chief executive of the Financial Services Roundtable, a consortium of banking-related companies that offers financial support to the Identity Theft Assistance Center.
Mr. Bartlett said such credit lines are typically ''big pools of money,'' and if consumers do not regularly check their accounts, that pool can drain quickly.
The Federal Bureau of Investigation's annual mortgage fraud report, which was released in April, cited home equity credit fraud as an ''emerging scheme'' in the slumping real estate and mortgage market.
Those with poor credit have been preyed upon by identity thieves in recent years, because thieves who pretend to be such owners could easily obtain mortgages from subprime lenders with little documentation.
Now that lenders have vastly tightened their lending criteria, criminals who specialize in mortgage fraud have little choice but to move upstream and seek out victims with good credit.
Home equity lines are a favorite option because they are almost as easy to open as a credit card account, as long as a criminal has the proper financial information.
In a typical scheme, the F.B.I. said, perpetrators pose as homeowners to establish home equity credit accounts online.
Criminals will then often send a fax to the bank requesting a wire transfer of funds to a different account. To verify the request, the bank unknowingly calls the perpetrator.
The F.B.I. does not break out various types of mortgage fraud by state, but in general, mortgage fraud is a bigger problem in New York, New Jersey and Connecticut than in many other states. New York is among the 10 states with the highest rate of mortgage fraud, while New Jersey and Connecticut rank in the top 20.
Mr. Bartlett, of the Financial Services Roundtable, said the region was a logical choice for mortgage fraud because of the relatively high value of homes there and the relatively high income of the residents.
Victims of such schemes are typically reimbursed by the lender if a bank investigation confirms fraud, Mr. Bartlett said. But lawyers who represent victims of identity theft said such remedies do not often come quickly or easily.
One way for a homeowner to determine if someone has created an equity credit line is to enroll in an identity fraud detection service like one offered by the Identity Theft Action Center, called ITAC Sentinel.
That service, which costs $10 to $18 monthly, will alert subscribers to credit inquiries or changes to an account.
Mr. Bartlett said that Identity Theft Action Center, a nonprofit organization, earns nothing on the service.
Services like ITAC Sentinel can also provide alerts to debt unrelated to home equity, like credit card accounts recently open in the subscriber's name.
The major credit bureaus -- Equifax, Experian and TransUnion -- offer competing credit monitoring services. And a check of a credit report would also reveal a debt to a bank unknown to the homeowner or a debt to an existing bank that has suddenly grown larger.
CHART: INDEX FOR ADJUSTABLE RATE MORTGAGES: 1-year Treasury rate; Rates on most adjustable mortgages are set 2 or 3 percentage points above this index.(Source: HSH Associates) Chart details line graph.
July 27, 2008, SundayÂ Â Â Â Late Edition - FinalSection: REÂ Â Â Â Page: 10Â Â Â Â Column: 0Â Â Â Â Desk: Real Estate DeskÂ Â Â Â Length: 641 words