When times get tough, the tough get innovative. Ten years ago mortgage borrowers attempted to fool the system by attempting to downplay delinquent accounts and boosted their incomes up to qualify for loans that they otherwise would not get. Now it looks like borrowers have found a new way to get lower payments from lenders on loan modifications by doing just the opposite.

More and more borrowers have been playing down income and pumping up their debts to seem more distressed. Some firms have alleged that as many as one out of every five mortgages contains material inaccuracies; many of which serve the purpose of making borrowers seem less affluent than they are.

Firms that look into statements for inaccurate information claim that there are so many made up W-2 statements and fabricated phone numbers to confirm employment and pay that they will look up an employer's direct number instead. Borrowers attempting to swindle the lenders will give them their own phone number or a friend's number and say that it is their employer. Lenders aren't going to take this sitting down of course; looking at bank statements and recent tax filings are two ways to catch these people in the act.

Borrowers might overstate the amount of credit card debt that they owe as well. Even as lenders pull credit reports to confirm the debt, people are running up their credit card balances on purpose before stopping payment on mortgages that they can in fact afford. A third type of fraud occurs when borrowers claim they live in a property they actually rent out.

To make matters worse, loan modification and foreclosure-rescue specialists encourage borrowers to do this or change the information without their consent. Even though there are many legitimate providers, a good amount play the system as a way to write off charging for a service that is free. Authorities are now looking into loan-modification specialists who directly defraud consumers.

Mallory Megan is employed by a debt collection company. Also she writes articles on business, finance, the credit industry and collection agencies. Get a totally unique version of this article from our article submission service