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FinCEN warns of home equity conversion fraud schemes
WASHINGTON (4/28/10)--The Financial Crimes Enforcement Network (FinCEN) has warned of increased incidences of the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) program being used to perpetuate financial crimes against senior citizens. Home Equity Conversion Mortgages (HECMs) are federally insured reverse mortgages backed by the U.S. Department of Housing and Urban Development. Specifically, FinCEN has warned financial institutions to be aware of new fraud trends, including “the theft of a senior’s HECM loan proceeds through cross selling of financial products” that violate the rules of the Department of Housing and Urban Development or the outright theft of reverse mortgage proceeds by family members, caretakers, or loan officers. FinCEN has also noted cases where a family member or other individual with power of attorney over the senior’s finances used that power to “apply for and close HECM loans without the full knowledge or participation of the victim.” “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,” FinCEN Director James Freis, Jr. said, adding that FinCEN is “working closely” with HUD and the Secret Service 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.” FinCEN has also requested that financial institutions “use certain key words” in their Suspicious Activity Reports (SAR) to “assist law enforcement in identifying and prosecuting these crimes.” For the full FinCEN release, use the resource link.
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