According to Krista Franks,
The Financial Crimes Enforcement Network (FinCEN), established in 2009 by the Obama administration to investigate financial crimes, is expanding its reach.
The agency, which in the past has required banks to have anti-money laundering programs and notify FinCEN of suspected fraud through suspicious activity reports (SARs), will now require non-bank residential mortgage originators and lenders to do the same.
FinCEN has noticed recently that many SARs it has received from banks reported suspicious activity on loans originated by independent lenders.
“FinCEN believes that the new regulations will help mitigate some of the risks and minimize some of the vul-
nerabilities that criminals have exploited in the non-bank residential mortgage sector,” according to a statement released Tuesday by FinCEN.
The new regulation follows a recent proposal that would extend the same requirements to the GSEs and the Federal Home Loan Banks.
FinCEN expects the result of these expanded rules will be a rise in SARs, which will “provide government an industry a more complete perspective on mortgage related crime trends nationwide,” according to FinCEN’s statement.
The new regulations will close “a regulatory gap,” according to James H. Freis, Jr., director of FinCEN, who says, “Suspicious activity reports are a critical source of information to law enforcement and regulatory agencies in their investigation and prosecution of mortgage fraud and a wide range of other financial crimes.”
Recent SARs submitted to FinCEN have revealed trends in identity theft, fraudulent flipping and flopping, and the use of straw buyers, a scheme in which a scam artist recruits a buyer with high credit to apply for a mortgage loan on his or her behalf.
FinCEN continues to work with the Financial Fraud Enforcement Task Force and the Residential Mortgage-Backed Securities Working Group to combat mortgage fraud.
-Greg Wilson
The REI Mentor (http://www.reimentor.com)
