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|FOR IMMEDIATE RELEASE
April 27, 2010
|CONTACT: Bill Grassano,
FinCEN Warns Lenders to Guard Against
Home Equity Conversion Mortgage Fraud Schemes
New Guidance Assists Financial Institutions
VIENNA, Va. – The Financial Crimes Enforcement Network (FinCEN) today released new guidance, Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Home Equity Conversion Mortgage Fraud Schemes, to assist financial institutions in guarding against fraud schemes perpetrated against senior citizens who use the Federal Housing Administration’s (FHA’s) Home Equity Conversion Mortgage (HECM) program, a form of reverse mortgage.
"The most troubling aspect of HECM fraud is that it takes advantage of senior citizens who have worked hard over their entire lives to own their homes,” said FinCEN Director James H. Freis, Jr. “To combat these frauds head-on, FinCEN is working closely with HUD’s Inspector General (U.S. Department of Housing and Urban Development’s Office of Inspector General) and the Secret Service (Department of Homeland Security) to proactively identify hot-spots of suspected HECM and other mortgage fraud activity and directly provide to law enforcement a more defined battleground to direct their resources."
As the popularity of the HECM program has grown, now accounting for nearly 100 percent of the reverse mortgage market, public reports of financial crimes against seniors involving the FHA program have become more prevalent. In this advisory, FinCEN highlights the new trends and schemes that law enforcement and HUD officials have identified involving thefts from seniors by family members, loan officers, and others as well as the use of unsuspecting seniors in property flipping and other HECM-related fraud schemes, and requests that financial institutions use certain key words within the Suspicious Activity Report (SAR) narrative section to assist law enforcement in identifying and prosecuting these crimes.
Among the trends and schemes reported in the guidance:
This advisory supports the efforts of the Financial Fraud Enforcement Task Force (FFETF), the U.S. Department of the Treasury’s broader initiatives to ensure that U.S. financial institutions are not used as conduits for illicit activity, including fraud against the elderly and the FHA, and a FinCEN and HUD OIG mortgage fraud initiative.
FinCEN’s mission is to enhance U.S. national security, deter and detect criminal activity, and safeguard financial systems from abuse by promoting transparency in the U.S. and international financial systems.