An article in the Los Angeles Times on Tuesday documented the sad story of a defaulted homeowner who was the victim of alleged foreclosure fraud. The homeowner said he was tricked into signing over the title of his home by a scam artist who did nothing to stop the foreclosure and then took out another loan against the property with no intention of paying it off. The article goes on to make the case that foreclosure fraud crime is on the rise.

It is a crime that consumer advocates fear could become increasingly common — especially in Southern California, where many homeowners have stretched themselves to their financial limits to afford the region's record high housing prices.

"The scammers don't create the foreclosure rates, but they swoop in at the time that someone is in distress," said Elizabeth Renuart, a staff attorney with the National Consumer Law Center in Boston and the author of "Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-Stripping Foreclosure 'Rescue' Scams."

While still considered low, indications are that the nation's foreclosure rate is on the rise, meaning the pool of potential victims is growing. Overall, the foreclosure rate in the Los Angeles region has doubled since October, according to RealtyTrac Inc., an Irvine-based company that monitors foreclosures. As of February, the rate was one foreclosure for every 1,223 households.

At the same time, the steep rise in housing prices over the last few years has created a massive amount of equity in many properties — a tempting target for swindlers.

The Milwaukee Journal Sentinel posted a similar article last month.

It’s not clear from these articles whether the apparent rise in foreclosure-related fraud is the result of a few bad apples, widespread scams or just more vigilance on the part of the media and homeowner advocate groups such as the ones quoted. In any case, legitimate foreclosure investors will need to find ways to overcome the stigma associated with foreclosure investing because of the increased attention to this problem. In the end, the increased attention benefits both homeowners in default and legitimate foreclosure investors, but it may take some time and effort to separate the wheat from the chaff.

Any thoughts on how legitimate foreclosure investors can differentiate themselves from scammers? Make a comment or send us an e-mail.