Alert August 21, 2012

FinCEN Issues Advisory on SARs related to Mortgage Loan Fraud

In prepared remarks to the American Association of Mortgage Regulators, FinCEN Director, James H. Freis, Jr., announced that FinCEN issued an advisory to assist financial institutions—specifically non-bank residential mortgage lenders and originators—in filing more useful Suspicious Activity Reports related to mortgage loan fraud. Director Freis noted that FinCEN issued the advisory to facilitate compliance with FinCEN’s regulations requiring nonbank RMLOs to establish anti-money laundering programs and file SARs. The advisory identified the types of mortgage loan fraud generally reported in SARs to help financial institutions identify illicit activities. The types of mortgage loan fraud identified include:

  • Occupancy fraud
  • Income fraud
  • Appraisal fraud
  • Employment fraud
  • Liability fraud
  • Debt elimination schemes
  • Foreclosure rescue fraud
  • Identity theft
  • Home equity conversion loan fraud
The advisory also described potential red flag indicators of illicit activity such as language in a short sale contract permitting resale promptly and past misrepresentations.