Mortgage fraud is running rampant across the U.S., posing potential financial damage or ruin to homeowners and even the local community. The FBI reports that the illegal activity can have a domino effect on the local housing market and the economy at large.

Here are some tips for recognizing and preventing mortgage fraud:

For sellers

* Get references for real estate and mortgage professionals — and check them. Make sure they’re licensed with the state, county or city.
* Be cautious about selling your property, especially if it’s not currently on the market.
* Read and understand everything you’re asked to sign, and talk to an attorney if you need something explained.
* Don’t sign any documents with information left blank.
* Do not agree to an amount above your asking price, especially if you are asked to refund the difference after the closing or if the extra money is to be used for repairs or improvements that you know are unnecessary.
* Be wary of offers to “save” you from foreclosure. You may pay thousands of dollars in fees without reducing or eliminating your debt and could even end up losing your home. Work with your lender instead, and insist on getting a complete set of the closing documents.

For buyers

* Be extremely wary of “no money down/cash back at closing” investment opportunities.
* Do your homework. Check the sales history of the property — several sales within a short period of time could indicate inflated values — and have your own real estate agent or appraiser establish the value.
* Check with your local tax assessment office or recorder of deeds to make sure the seller really owns the property.
* Do not let someone else use your name or Social Security number to buy a property, especially if they offer to pay you for using it.
* Read and understand everything you are asked to sign, and talk to an attorney you have chosen if you need something explained.
* Do not sign any documents with information left blank or that contain inaccurate information, such as overstated income, source of your down payment, incorrect sales price, nature or length of your employment, intent to occupy the property as your primary residence, etc.
* Deal directly with the lender or the mortgage broker. Do not let a third party arrange your loan.
* Insist on getting a complete set of the closing documents.