Insurers of Foreclosed Homes Brace For Arson Epidemic

Wednesday, Jan. 9, 2008 10:45 a.m. EST

The real estate market could be going up in smoke – literally.
Insurance fraud investigators are bracing for an epidemic of arsons as desperate borrowers torch their homes for insurance money.

Recent arson incidents could be the start of an alarming trend. A Houston man allegedly burned down his home for insurance money to dodge foreclosure, the fraud group reports.

Authorities became suspicious, in part, because the house was virtually empty of furniture and appliances and the power had been shut off. The insurer paid off the mortgage and gave the owner $10,000 in equity but is now is trying to recoup its money.

In Grand Rapids, Mich., a woman facing foreclosure was arrested for torching it for insurance money, and in Woodland Park, Colo., a homeowner was charged setting fire to his home on the same day he was to be evicted for foreclosure.

"Certainly Colorado is in the same boat as a lot of states, where at one point we were leading the nation in foreclosures,â€