Amidst signs of stabilization, with an increase in sales and rise in home prices in certain states, the mortgage industry braces for a fresh set of foreclosures. Many of the option ARM loans, offered to even less credit-worthy borrowers during the housing boom, have started to adjust. In Arizona alone, almost 128,000 of those option ARMs are expected to reset over the next year, while many have already begun to adjust this month.

What this means is, there's no respite from foreclosures in near future. It also means there will be a significant rise in the number of mortgage frauds in the days to come. When the teaser rates on option ARMs will reset, the monthly payments will increase to a great extent. The payments can even go up to 5 or 10 times the amount the borrowers have so far been paying on their loans. As a result the number of scams is expected to increase as the distressed homeowners will be desperate to refinance their loans.