Five indicted in $20 million Idaho mortgage scam

SALMON, Idaho (Reuters) - An Idaho bank officer and four others accused of masterminding a mortgage scam were indicted in Boise on Wednesday on charges of defrauding an Idaho bank of $20 million, according to federal prosecutors.

Authorities say the accused, including two building contractors, a mortgage broker and a Realtor, all from the Boise, Idaho area, provided false financial data and fraudulently fronted applicants -- known as straw buyers -- in attempt to obtain 49 house loans.

The FBI has linked a jump in mortgage fraud to "an ideal climate" created by the slump in the U.S. housing market.

Under the Idaho mortgage scheme, identifying information submitted by straw buyers was used on loan applications that in many cases overstated the income and credit rating of ostensible borrowers and falsely claimed the funds would be used to build owner-occupied homes, according to a news release. The group collected more than $242,000 in assorted fees related to the mortgage scam, officials said.

The Idaho indictments came on the same day 11 people accused of participating in a $14 million mortgage scam in New York were indicted in federal court in Brooklyn and one week after the FBI released a study showing the number of suspected mortgage fraud reports rose by 31 percent from 2006 to 2007.

A report in March by the Mortgage Asset Research Institute examining residential mortgage fraud and misrepresentation in the United States found Florida ranked No. 1 in 2007, followed by Nevada, Michigan, California and Utah.

The five defendants in the Idaho case are scheduled for trial July 22 before a federal judge in Boise.

(Editing by Adam Tanner and Cynthia Osterman)