From the U-T:

Located on a busy section of South Santa Fe Avenue in Vista, Aguilera’s Bookkeeping & Income Tax isn’t the kind of business that draws much attention.  It sits next to a hair salon and supply business, and across from an auto shop. The red paint on the three steps leading to the small office is chipped and flaking.

But federal prosecutors say the business was the center of a mortgage fraud scheme that churned out scores of bogus W-2 forms, fake pay stubs and false tax records for a network of almost two dozen real estate agents and loan officers.

The documents helped secure about $55 million in fraudulent loans from banks and mortgage companies between 2002 and 2008 to purchase homes in San Diego County and the San Francisco Bay Area, court records show.

This kind of fraud was rampant during the real estate boom days of a few years ago and peaked in San Diego County in 2006. But new government regulations and greater vigilance by burned lenders are helping to ease mortgage fraud schemes.

“In 2011 and 2012, we expect to see reports of fraud come down because a lot of the policies lenders have put in place are starting to work,” said Frank McKenna, vice president for fraud strategy at CoreLogic, a Santa Ana-based research firm that tracks fraud reported by lenders.

The national average for mortgage fraud in 2010 is 0.55 percent, according to CoreLogic. That means for every $100 that is loaned, 55 cents is being fraudulently obtained.

San Diego County fares slightly better: In 2009, the fraud rate was 0.44 percent compared with the Southern California average of 0.42 percent. The county’s rate between 2005 and 2009 peaked at 0.76 percent in 2006.

Several of the larger cases filed by the U.S. Attorney’s Office in San Diego cover that time period. They are being filed now, in part, because it takes time for investigators to unravel the schemes, said Curt Novy, president of the San Diego-based Corporate Mortgage Advisors. Novy works with federal and state authorities to investigate fraud and testifies as an expert in criminal and civil cases.

“These cases can take a year or two to investigate and unwind,” he said. “You’re seeing cases that happened between 2004 and 2006 or 2007 just starting to come out with indictments now.”

Mortgage fraud results in banks being stuck with bad loans and saddled with foreclosed property. Those homes erode the value of neighboring homes as they languish untended, often depressing prices and causing a drag on the overall market.

In the end, Novy said, “Everyone is paying the price.”

The Aguilera case centers on owner Roberto Aguilera, an enrolled tax agent with the Internal Revenue Service and licensed real estate agent with the state. The complaint filed against him says he would prepare letters falsely stating buyers were self-employed and that he had prepared tax returns for them. He did this for as little as $75 per letter. The documents were used to support applications for mortgages that also included inflated income and other bogus data.

In one instance, a real estate agent faxed a letter to Aguilera on May 12, 2005, asking him to fabricate two years of tax returns for a prospective borrower, showing a net income of $8,500 per month.

“Okey Robert, use your imagination,” wrote the agent, Mylene Funk of Oceanside, court documents recount.

Aguilera pleaded guilty to wire and bank fraud in June and is awaiting sentencing. Funk has pleaded not guilty to an indictment unsealed in June that charges her and 18 others, including Aguilera’s brother Benjamin, with mail and wire fraud.

Other major cases in San Diego include:

• Two dozen people, including a member of the Lincoln Park street gang, were indicted in April 2009 on racketeering charges. It was the first time the racketeering law was used in a mortgage fraud case. The lead defendant, gang member Darnell Bell, pleaded guilty in March, as have nearly a dozen others. Prosecutors say the scheme defrauded lenders of at least $20 million and as much as $50 million.

• Six people indicted in May on wire fraud and other charges for a mortgage fraud scheme that allegedly defrauded lenders of $20 million.

• Six people who ran a mortgage brokering company called Creative Financial Solutions Inc. were indicted in 2008 for wire fraud. They are accused of securing loans for buyers by submitting false loan applications that inflated income or hid the true purchase price of homes. The fraudulent loans totaled $16 million.

Assistant U.S. Attorney Robert Ciaffa, chief of the major fraud section of the U.S. Attorney’s Office in San Diego, declined to comment on pending cases. But in general, he said, the loose oversight by banks and regulators fed the frenzy.

“It was like the perfect storm for taking advantage of the times,” Ciaffa said.