The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said.

Reports of suspected mortgage fraud have doubled since 2005 and increased eightfold since 2002. Banks filed 47,717 reports this year, up from 21,994 two years ago, according to statistics from the Federal Bureau of Investigation and the Financial Crimes Enforcement Network of the Treasury Department. In 2002, banks filed 5,623 reports.

“I don’t think any law enforcement agency can keep up with mortgage fraud, because it’s such a growth industry,” said Chuck Cross, vice president of mortgage regulatory policy for the conference of state bank supervisors, an organization of regulators and bankers. “There’s too many cases, not enough agents.”

Mortgage fraud covers crimes like false statements on mortgage applications and elaborate “flipping” schemes that involve multiple properties and corrupt appraisers, title companies and straw buyers.

In one common flipping plot, someone buys a house, has it appraised for more than its true value and sells it to a straw buyer for the inflated price, pocketing the difference. The straw buyer lets the house fall into foreclosure, leaving the bank with the loss.

The cases coming into view reflect the recent boom in mortgages with limited borrower documentation and lax scrutiny.

Law enforcement agencies say they are overwhelmed, especially because investigating and prosecuting fraud can be complex and time consuming. The officials say career criminals and organized-crime rings have increasingly turned from other crimes to mortgage fraud because it offers lower risks and high profits.

“I could hire a dozen investigators and a dozen prosecutors and only scratch the surface,” said David McLaughlin, a senior assistant attorney general in Georgia who coordinates prosecutions of mortgage fraud.

Losses involving federally insured banks totaled $813 million in the 2007 fiscal year, more than double the $293 million lost in the 2002 fiscal year.

These figures most likely represent “the tip of the iceberg,” said the Mortgage Bankers Association, an industry group, because they do not cover mortgage brokers, who arrange more than half of new mortgages. The industry estimates the total loss this year at $4 billion.

Mortgage fraud can damage whole neighborhoods. Derrick Duckworth, a real estate broker in southwestern Atlanta, has watched “about 40 percent” of the houses in his neighborhood, Adair, become vacant as a result of mortgage fraud. The remaining residents cannot sell their houses because of the abandoned buildings and the neighborhood’s reputation for fraud, he said.

“The other day, someone broke into my neighbor’s crawl space and stole her copper plumbing,” he said. “Last week, we had an 18-year-old shot on the street.”

Fraud is especially common with subprime mortgages, the high-price loans for borrowers with poor credit. Lenders and investigators trace part of the foreclosure crisis to mortgage fraud.

For local law enforcement agencies, fraud is increasing as regulatory budgets are tight and other crimes seem more pressing, said Tom Levanti, a fraud investigator in New York.

“You only have a certain amount of resources,” Mr. Levanti said, “and in New York, you need to spend them on counterterrorism, protecting citizens, reducing violent crime. Mortgage fraud cases are long and time consuming, and the victims are usually financial institutions that can write off the loss. So as a police department, return on investment has to be thought about.”

Lenders say they have good relationships with investigating and prosecuting agencies.

“But law enforcement is just absolutely overwhelmed,” said Corey Carlisle, senior director for government affairs for the Mortgage Bankers Association, which has lobbied for more money to fight fraud. “Lenders say they have to market their cases to law enforcement,” meaning showing extraordinarily high sums or multiple criminals.

John Arterberry, executive deputy chief of the fraud section in the Justice Department, said federal prosecutors and the F.B.I. had made progress on mortgage fraud. Mr. Arterberry cited sweeps in 2004 and 2005 that resulted in more than 150 defendants charged in each sweep.

The bureau has 1,210 open mortgage fraud inquiries, up from 436 in 2003. Last year, those cases led to 204 convictions.

“We have limited resources and have to put them where they do the most good,” Mr. Arterberry said. “We’re able to zero in on hot spots and organized efforts."

This progress is too slow for Kristine Baugh, who said her neighborhood in Dallas had not recovered from a mortgage fraud that left in six vacant houses on her block. Ms. Baugh, a real estate broker, said she discovered what she believed was a fraud scheme in 2005, when six properties sold for far more than she felt they were worth and remained vacant until being foreclosed.

Suspecting fraudulent appraisals, she gathered documents on the sales and took them to the F.B.I., the district attorney and local officials. With neighbors, she sued an investor who she said was behind the fraud.

Years later, there have been no arrests in the case. The residents ran out of money and dropped their civil suit after the investor filed a countersuit. “Our neighborhood is still in shambles,” Ms. Baugh said. “The properties deteriorated and have to be kept up by the city. They’re a health hazard.”

The swimming pools at the vacant sites are breeding grounds for mosquitoes and potential West Nile virus sources, she said.

Such cases are likely to multiply, said Constance Wilson, executive vice president of Interthinx, which develops fraud detection tools for the lending industry.

“The cases we’re seeing today are from 18, 24, 36 months ago, when the market was still good,” Ms. Wilson said. “Now we’re going to see an increase in mortgage fraud, because all those loan officers, brokers and appraisers who were making six-figure incomes, now their back is against the wall. If that loan doesn’t close, they can’t make their home payment.

“So you have a desperation cycle,” she said. “There’s a lot of push for them originate volume.

“The consequences are that people are getting away with it. It’s damaging the entire real estate market. It’s devastating to victims. Not just lenders but consumers. It’s devastating to entire communities.

“When it’s this prolific,” she said, “we just don’t have enough law enforcement or enough prosecutors for all the cases out there.”

Copyright 2007 The New York Times Company. Reprinted from The New York York Times, National, of Tuesday, December 25, 2007.