10/5/2009 Red Flag Advisories Increase SAR Reporting of Mortgage Rescue Scams
In a recent gathering of agencies dealing with mortgage rescue scams and loan modification frauds, FinCEN detailed its efforts to detect such frauds and to forward information to the law enforcement community. FinCEN has made 30 case referrals involving more than 140 suspects, and much of this success comes from suspicious activity reporting by banks and other financial institutions. FinCEN can take credit for providing some descriptive red flags that have been helpful to institutions in recognizing possible fraud situations. One such red flag involves homeowners’ using third parties, posted as follows:
A homeowner says that he/she has hired a third party, perhaps advertised as or alleged to be a “foreclosure specialist” or “mortgage specialist,” to help him/her avoid foreclosure or help renegotiate the terms of his/her mortgage with the lender. This may be suspicious if the homeowner indicates that the third party:
* Charged up-front fees for foreclosure rescue or loan modification services;
* Accepted up-front payment only by official check, cashier’s check or wire transfer;
* Used aggressive tactics to seek out the homeowner by telephone, e-mail, mail or in person;
* Pressured the homeowner to sign paperwork he/she didn’t have an opportunity to read thoroughly or that he/she didn’t understand;
* Guaranteed to save the home from foreclosure or stop the foreclosure process “no matter what;”
* Claimed the process will be quick with relatively little information and paperwork required from the homeowner;
* Offered to buy the house and then rent it back to the homeowner;
* Falsely claimed to be affiliated with the government. (Perpetrators of scams often use names or symbols that mimic federal and state programs or falsely suggest that they offer legal services or are affiliated with an attorney or law firm); or
* Instructed the homeowner not to contact the lender, a lawyer or financial counselor.
SARs reporting such frauds should include the term “foreclosure rescue scam” in the narrative portion of the SAR. FinCEN states that the increased reporting of such suspicious activities does not mean that the activities are increasing, but rather that awareness of the activities is increasing. Red flags concerning mortgage fraud have been added to the red flag checklist posted on the Civic Research Institute website for Money Laundering, Terrorism and Financial Institutions.
USA PATRIOT ACT MONITOR is published by Civic Research Institute, Inc., 4478 U.S. Route 27, P.O. Box 585, Kingston, NJ 08528, 609-683-4450, email@example.com, as an update service for Money Laundering, Terrorism and Financial Institutions: Law · Regulation · Compliance · USA PATRIOT Act Monitor © 2004 Civic Research Institute, Inc. All rights reserved. Unauthorized copying expressly prohibited. The information in this publication is not intended to replace the services of a trained legal professional. Neither the editors, nor the contributors, nor Civic Research Institute, Inc. are by this publication engaged in rendering legal, accounting, or other professional services. The editors, contributors, and Civic Research Institute, Inc., specifically disclaim any liability, loss, or risk, personal or otherwise, which is incurred as a consequence, directly or indirectly, of the use or application of the contents of this publication.
<< News Releases Main Page