The big news right now is the current US financial crisis. It all started when lenders loosened the requirements and incentives for mortgages. New mortgages featured cash up front and minimal required qualifications. Sure enough, when payments came due a large number of borrowers couldn’t afford them, but by this time institutions had combined them with legitimate investments, shopped them around and presented them as safe to buy – and now, we’re all paying the price.

Where does identity theft fit into it? Let's look back at these mortgages. They were known as subprime or "Alt-A" mortgages. They had these characteristics:

• The borrowers' debt to income ratios were worse that was allowed for a typical mortgage loan.
• Low credit scores were not necessarily a barrier to borrowing.
• The loan could be much higher compared to the property's price than a standard mortgage, leading to no money down or even loans valued above 100% of the property value.
• Lax borrower income and asset document requirements - sometimes, lenders didn't require any third party statements of income and assets at all.

The result? Subprime mortgages presented some of the most appetizing opportunities for identity fraud in American history. Let's look at how Alt-A mortgage characteristics match up with an ID thief's motives:

• The ability to qualify with low credit scores or a high debt load increased the possible pool of victims. It was no longer necessary to choose an identity theft victim with good credit.
• High loan values allowed ID fraudsters to immediately benefit from a successful fake loan - in some cases they didn't even need to dispose of or exploit the property, since they could just abscond with the cash difference between the loan and property value.
• The advantages of lax documentation should be obvious. Instead of a complete, fully-stolen identity, the identity fraudster only needed a few key pieces of ID.

We'll probably never know how many identity thieves benefited from the subprime market, but our guess is that lots of them did. This must have amplified the current problem in US financial markets. The US Treasury Department reported that between 1997 and 2007, suspicious activity indicative of mortgage fraud increased over 1400%.  Just in the past three years, the FBI reported that their mortgage fraud caseload tripled. Suspicious reporting of personal information was cited as one of the main factors in the increase.

That all seems bad enough as it is, but what if you're paying off your mortgage and the FBI busts in to arrest you for fraud on a mortgage you've never even heard of? That's the danger of identity theft after the subprime crisis, and another reason to protect yourself with services like Lifelock or Identity Guard.