Anyone thinking of skating on mortgages owned by either Fannie Mae or Freddie Mac may want to think again. As a result of new government reports, the two companies say they are going to do a better job of going after scofflaws.

Fannie and Freddie can pursue judgments against borrowers who walk away from their loans even though they have the ability to make their payments. That's called a strategic default, and many borrowers are taking that step -- typically throwing in the towel because their homes are no longer worth as much as they owe.

But when their homes are sold at foreclosure and the proceeds are not enough to cover their outstanding loan balances, it creates a deficiency for which many defaulters either don't realize they are liable or don't care.

To date, the two government-sponsored enterprises (GSEs), which are now highly profitable after five years of running in the red, haven't done a particularly good job at pursuing deficiency judgements, according to scathing reports from the Office of the Inspector General at the Federal Housing Finance Agency.

But the FHFA says it is going to make the GSEs clean up their acts. And that should serve as fair warning to those who can pay but fail to do so.

As the OIG says time and again in the reports, chasing down strategic defaulters can not only cut the enterprises' losses on bad loans but can also "serve as a deterrent to those who would chose to strategically default on their mortgage obligations."

Going after strategic defaulters is big money. According to the OIG report criticizing Freddie Mac's lax practices, the company has left billions on the table.

The report found that Freddie Mac, which has received some $71 billion in taxpayer assistance since it was taken into conservatorship by the FHFA in September 2008, did not refer nearly 58,000 foreclosures with estimated deficiencies of some $4.6 billion for collection by its vendors.

Of course, only a percentage of that amount might have been recoverable because some borrowers are simply tapped out. But because the bad loans weren't even considered for recovery, Freddie Mac "eliminated any possibility" for collecting what is owed, the OIG said.

Now extrapolate that to Freddie Mac's entire holdings and you can see we're talking some really big money here. As of last December, the big secondary mortgage market company had nearly 50,000 foreclosures still on its books, carrying a value of some $4.3 billion. And as of March 31, it held 364,000 mortgages that were 60 days or more delinquent and were, therefore, likely foreclosure candidates.

Fannie Mae's portfolio of troubled assets is much larger. At the end of last year, it owned more than 105,000 foreclosed properties valued at $9.5 billion and carried a "substantial" shadow inventory of 576,000 seriously delinquent mortgages that were 90 days late or more and likely to end up in foreclosure.

It does a better job than the smaller Freddie Mac, according to the OIG. But in a separate report, Fannie Mae earned a slap on the wrist for not taking any action on nearly 30,000 accounts because statutes of limitations had expired or were about to. For the same reason, the report says, it failed to pursue deficiencies of some 15,000 accounts that already had been reviewed for collection by its vendors.

Several factors influence the decision to pursue deficiency recoveries. But most importantly, state laws dictate timelines for filing claims. Some states do not allow deficiency judgments at all, but they are fair game in 35 states, including the District of Columbia. However, 10 have short windows -- only 30 to 180 days in which collections are allowed.

But not going after defaulters where it is permissible to do so not only reduces the chances of recovering potentially billions, the reports point out, it "incentivizes" other borrowers to walk away from mortgages they can afford to pay.

The new OIG reports are a follow-up to one issued a year ago that called the FHFA, the agency which oversees the two GSEs, on the carpet for failing to provide enough guidance about effectively pursuing and collecting deficiency judgements wherever and whenever possible.

In September, in response to a draft of these latest reports, the agency set down requirements for both enterprises to maintain formal policies and procedures for managing their deficiency collection processes, establish a set of controls to monitor their collection vendors and comply with state laws in an effort to preserve their ability to pursue collections.

And by the first of the year, the FHFA said it will begin to more closely monitor the effectiveness of Fannie Mae and Freddie Mac's deficiency judgement processes. That's government-speak for, "We'll be watching you from now on, so you'd better get your collection house in order."

"The devil made me do it" was perhaps the most famous catch phrase of comedian Flip Wilson. And it was among the numerous excuses one potential borrower gave his lender to explain his lousy credit report.

The 10-page letter of explanation ranged from hurting his back while he was in the military to having gout to having a poor relationship with his daughter because his father had multiple children with multiple women.

But perhaps his best absolution was this: "I was married to the devil. I should have known that, because my marriage license number was 666."

This kind of creative rationale might have worked during the mortgage market heyday a decade ago, when you could secure financing if you could draw a breath. Nowadays, though, underwriters don't want excuses. Heck, things are so tight they might not even give you a chance to explain away a blip in your credit record.

But that doesn't stop people from trying, as educator Karen Deis found out recently when she asked her mortgage market clients to report some of the strangest letters of explanation they've received from borrowers.

Deis, who operates MortgageCurrency.com, a website that keeps loan officers, processors and underwriters abreast of changes in lending guidelines and rules, has been on the receiving end of a couple of doozies.

In one that made her chuckle, the man explained that he had to file for bankruptcy when a restaurant venture with his daughter failed. He bought the place with his daughter, he explained, so she could help him and teach him how to run it when he retired.

Besides the fact that you can't explain away such a financial failure, there was this little kicker: The daughter was a mere 9 years old.

And then there was the woman who told Deis that her credit record was perfect. It just had to be, she explained, because she paid all her bills through collection agencies -- and she always paid on time.

Here are some of the best -- or should I say worst -- of the suspect excuses Deis has managed to collect:

-- The borrower, a woman who had had a sex change operation, said her bad debts didn't count because they were incurred when she was a man.

-- Another woman wrote that she was overextended because she had to pay for her cat's chemotherapy treatments.

-- Another reasoned that since she had filed for bankruptcy in January and this was March, she was starting over with a clean slate. So what was the problem?

-- Similarly, a man who was repeatedly more than 90 days late on his bills wondered why such a record was questionable. "I simply choose to make quarterly payments," he explained.

-- A woman said a medical condition caused her to have multiple late pays on her credit record. She went on to explain that she experienced anxiety attacks when she opened her mail, so on the advice of her physician, she didn't pay any bills that were snail-mailed to her.

Besides, she added, that was years ago and she now pays her bills online.

-- Another borrower also used a medical malady as his excuse for his spotty bill-paying record. This time, it was that he had been diagnosed as having multiple personalities, and one of these other characters was responsible for paying all the bills.

-- Said one guy who has late on his gasoline credit card: "I got a load of bad gas."

-- Likewise, there was this explanation from someone who was late on his car loan: It was a bad car, so he took it back to the dealer.

-- Another disgruntled car buyer said he, too, returned a lemon to the dealer. As an explanation, he offered that the salesman made him buy the car, that the dealer discriminated against him and that the monthly payment was too high.

Interestingly, the same borrower had had three previous cars repossessed over a three-year period.

-- Why did one borrower run up the balances on her credit cards, to the point where she could not make the payments? Because she was "guaranteed" to win the lottery, of course.

In little-noticed proceedings earlier this year, 11 people pleaded guilty in a federal court in northern Virginia to a scam that fleeced banks out of millions of dollars.

According to the charging documents, the defendants were involved in overlapping conspiracies in which they would systematically alter the terms of real estate closings so lenders would send more money than they actually needed to. The thieves would then pocket the difference.

The case shines some light on perhaps the shadiest side of mortgage fraud. Shady because very few people know about it, and of those who do, few are willing to talk about it.

Settlement fraud, aka escrow or closing fraud, doesn't occur very often, says Steve Gottheim of the American Land Title Association, the trade group for people who review and insure titles and handle the lion's share of real estate closings.

"It's extremely rare," Gottheim says. "Less than one half of 1 percent of all real estate transactions involve any type of fraud." But it does happen, he concedes.

Andrew Liput of Secure Settlements, a company that vets otherwise unsupervised closing professionals on behalf of lenders (who deliver billions into the hands of closing agents with little or no protection against fraud), estimates that 15 percent of the $4 billion lost by lenders to mortgage fraud last year -- some $600 million – occurred at the closing table.

We're not talking about illegal or even questionable flipping arrangements, or even straw buyers. Those schemes are counted elsewhere. Rather, we're talking about nickel-and-dime cases where the closing sheet you sign and the one sent to the lender are different, and the closing agent keeps the difference.

Maybe they change the amount of a single line-item closing cost, or perhaps two or three. You might pay $10 more here than you should have, or $25 more there. Or maybe the sales price you actually paid is lower than the amount the lender is asked to fund. Thieves can do wonders with Wite-Out.

Often, the difference is pocket change compared to the hundreds of thousands of dollars involved in the overall transaction. But alter enough settlement documents and pretty soon you're talking serious money.

Last year, for example, a South Florida closing agent was charged with falsifying HUD-1 settlement statements in 32 separate closings and stealing more than $3 million.

Big money is also lost when the closing agent fails to pay off a seller's lien and takes off with the money. The seller receives his due -- the difference between the selling price and the mortgage or mortgages he had on the property -- but the old lender gets nothing. And until that loan is actually paid off, the new lender -- your lender -- doesn't have a first position mortgage.

An already disbarred Massachusetts lawyer was sentenced last year to 51 months in prison for failing to pay off existing liens and diverting more than $3 million into his own accounts. And Liput has "seen several cases" in the last six months in which nefarious title agents doctor their reports so the prior liens remain invisible.

Generally in cases of closing fraud, it's the lender who's on the hook. As long as you purchase owner's title insurance at settlement, or at least what's called a "closing protection letter," the lender will bear the brunt of the loss, says ALTA's Gottheim. But even if you decline to buy your own policy, he says, you'll "get some ancillary benefits from the lender's policy."

"Ninty-nine percent of the time when escrow funds are taken, the lender or the title insurance company bears the risk," Gottheim says. "And in many states, title agents buy into what's called 'crime bonds.'"

The lender's policy, which you pay for at closing, protects the lender against fraud and defects in the title. An owner's policy, which protects you and guarantees that the title insurance company will work on your behalf to correct problems, should cost about $250 when issued simultaneously with the lender's policy. The closing protection letter is sometimes free; other times, there's a small fee.

Your real headache comes when you go to sell your property, or perhaps refinance, and find out there's an existing mortgage or two on it that have never been paid off. If that happens, it could hold up your sale, perhaps delaying the deal for so long that your buyer decides to drop out and find a house elsewhere.

Here are some basic steps to take to protect yourself against this kind of "back-end" fraud:

-- Obtain your loan papers early, and then make sure the numbers line up with the documents you are given at closing.

-- Shop for a trustworthy professional. Don't be steered. Call your state regulator to make sure the agent's license is current, and ask if there have been any complaints lodged against him. But even then, be careful. Liput says "nearly all the bad actors" his firm has unearthed were licensed, and were members of a trade association.

-- Ask for a color ID, and look for some kind of seal on the door or stationary that shows the agent has been vetted by an independent third party. In many instances, charlatans set up bogus companies that don't really exist. They just hang out a shingle and start doing business. Then, before you know it, they split, only to set up shop under another name somewhere else.

-- When interviewing closing agents, ask how long they've been in business, if they are insured and if there have been any claims against them. You'll also want to know if they've ever been sued or lost their licenses. All of this is public information and can be discovered with what Liput calls a little "basic ground-level investigation."

-- Finally, to protect yourself from being manipulated, schedule the closing a few days in advance of your move. If something smells fishy, walk away. You have every right to stop the show at any time.

-- If you feel the need, hire an attorney to represent you at the settlement table. Even if the title pro you pick is legit, he represents the lender's interests, not yours.