LOS ANGELES - Some folks celebrate their last home mortgage payment by setting fire to their loan agreement. Lately, people behind on their mortgages are simply setting fire to their homes.
In what appears to be the latest symptom of the US mortgage meltdown and credit crisis, insurers, law enforcement, and state agencies nationwide have reported a jump in home and auto fires in the past year set by owners unable to pay debts. The numbers are small, but they're leading the insurance industry to scrutinize what seem to be routine blazes.
"We've seen a dramatic increase in this kind of fraud," said Dan Bales, director of fraud investigations at Mercury Insurance. "People upside down on their house with variable interest-rate loans, or upside down on their cars, are pretty quick to burn their property right now."
Last week, a Sacramento-area couple was arrested on charges that they burned their Jeep and drove their Nissan pickup into a river, then filed insurance claims. Investigators said the wife admitted she was trying to escape her $600 monthly car payment.
Three weeks ago, police arrested a woman in Easley, S.C., and accused her of deliberately setting fire to her home just three days after the bank hung a foreclosure notice on her door. In January, an Omaha man was charged with arranging to have his three-bedroom house burned down to avoid losing it to the bank.
The fires are keeping fraud investigators such as Anne Luce occupied. "I'm busier . . . than a one-armed paperhanger," said Luce, who works on auto cases for Bristol West Insurance's special-investigations unit.
These financially motivated fires are surprising some officials, because they come after a decadelong decline in overall arson rates nationwide. Few state or federal agencies categorize arson in terms of the financial status of liens on the property, making nationwide figures elusive. Still, areas of the country are showing a significant increase.
Insurers referred 14 cases of questionable home fires as having foreclosure avoidance as a possible motive to the California Department of Insurance last year, up from seven in 2006 and two in 2005. In the same three-year period, reports of auto arson increased one-third, to 343 cases last year.
In Ohio, the total number of reported "auto owner give-ups" - insurance jargon for fraudulent car fires and staged car thefts - rose 150 percent between 2005 and 2007, to 245 cases last year.
This month, insurers say they are meeting with California investigators to discuss potential fraud during last fall's wildfires - including the prospect that some of the 2,000 burned homes were cases of opportune arson.