Insurance fraud investigators say they are bracing for an outbreak of home arsons set by cash-strapped homeowners looking for insurance money to escape from foreclosure.

Homeowners who resort to such tactics face felony charges including arson, conspiracy and fraud. The charges could be much greater if someone is harmed. If the charges stick, homeowners who set their homes ablaze likely will be jailed.

The Coalition Against Insurance Fraud says the illegal tactic is not new, but the coalition fears current market conditions could trigger a home-based arson outbreak beyond normal levels.

Falling home values and tighter lending rules are making it difficult for many people to refinance their way out of trouble, get loan work outs or otherwise escape foreclosure.

The number of alleged mortgage-related arsons remain small, but this year the number jumped 50 percent above the 2006 rate in California, according to the coalition.

"I don't believe that it's had time to ripple through the market yet to the point that many people have reached the point of desperation, but I absolutely think it's coming" says Alex Ahart, a fire investigator with EFI Global, an insurance claims investigator.

The coalition has recorded a few home torching incidents, including a Houston, TX, home owner who allegedly set his home ablaze after allegedly spray-painting racial slurs on the exterior to disguise his actions as a hate crime.

A Google News search turns up a host of home arson-for-insurance reports.

Fire officials suspect arson in a vacant home fire that killed an unidentified male in recent Lathrop, CA. The house was in the early stages of foreclosure.

In Putnam County, IN, the prosecutor says a home owner offered a neighbor $5,000 in a home arson-for-insurance scam.

Instead of participating, the neighbor told police of the scheme. And court records reveal a bank had filed for a mortgage foreclosure on the rural home.

In related news ( Energy Saving House Repairs Renovations Energy Efficiency Home Improvements ), Central Florida law enforcement officials have tied an unusual crime spree of auto arsons to the housing market as homeowners try to "burn off" excess debt in order to make the mortgage payment.

The right way to approach an impending default on a mortgage payment or foreclosure isn't with a box of matches. At the first sign of trouble, work closely with the lender for a workout or refinance or seek other assistance, consumer experts advise.

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