Beach County reached a distressing benchmark this week in a federal mortgage fraud report that included reviews of dubious home loans awarded during the real estate boom.

The report from the Financial Crimes Enforcement Network, an agency of the Treasury Department, found Palm Beach County ranked sixth in the nation per capita for suspicious activity relating to sham loans. The county's jump from 31st place during the first quarter of the year put it ahead of both Broward and Miami-Dade counties, which ranked eighth and ninth, respectively.

Financial institutions tip off the financial crimes agency when they come across suspect mortgages. In the second quarter of this year there was an 88 percent increase nationwide in reports compared to the same time in 2010.

The spike is attributed to a review of loans written between 2006 and 2008 as investors continue to pressure banks to buy back mortgages that didn't meet underwriting standards or were bogus for other reasons, such as the borrower's income was falsified, the intent to occupy the home was false or the appraised value was bad. After review, the reports are meted out to law enforcement agencies.

One South Florida analyst said the increase in reports, which typically include an explanation of what occurred as well as documents to back up the activity, could mean more South Florida prosecutions for boom-time mortgage fraud.

"If you're a cop investigating this stuff, this is like gravy," said Michael Sichenzia, president of Dynamic Consulting in Coral Springs. Sichenzia is a former mortgage whiz who spent time in New York state prison for mortgage fraud and now investigates suspect housing deals. "They're going to go out there and do their job because there is a mandate to get to the bottom of this, and someone is going to pay."

Right now, it's financial institutions worried about having to pay back investors who bought bundled mortgages that experienced massive defaults as toxic and fraudulent loans went belly-up.

Last year, Bank of America bought back $2.87 billion in bad mortgages from federal mortgage backers Fannie Mae and Freddie Mac.

"We're continuing to see a large number of suspicious activities that occurred more than two years ago, an indication that financial institutions are uncovering fraud as they sift through defaulted mortgages," said James H. Freis, Jr., director of the Financial Crimes Enforcement Network.

In 2001, just 4,696 suspicious activity reports were made nationwide. That climbed to 70,472 last year. Through the first half of this year, 55,043 reports were made.

Florida ranked second in reports per capita during the first half of this year, a jump up from its fifth-place spot in the first quarter. California was the top-ranked state during the first and second quarter of the year.

Sichenzia said it makes sense that Florida ranks high, considering the amount of building and selling that occurred during the boom.

"We had so much construction and all sorts of financial shenanigans on the HUD statements so the buyer could come in with no money down," he said. "Buyers of condo conversions and new-home construction were treated like marks in a con game."

This week's report also noted that suspicious mortgage activity continues despite increased scrutiny. In the second quarter of this year, dubious activity was reported on 1,825 loans written during the past 90 days.

The type of fraud includes identity theft, false statements about income, employment, bad appraisals and "buy and bail" schemes. Buy and bail is when a homeowner gets a new loan for another home before walking away from their current home.

"About half of the subjects were forthright about their desire to obtain mortgages for larger homes before letting their current homes fall into foreclosure, because 'everyone else was doing it,' " the report said.