The Financial Crimes Enforcement Network (FinCEN), Secret Service, and HUD-OIG formed a partnership in December to help Florida law enforcement proactively identify and combat newly emerging fraud involving reverse mortgages said James H. Fries JR, Director of the FinCEN during a speech at the Florida International Bankers Association earlier this week.
“As many of you know, the HECM is an option that can give senior citizens greater financial security by providing access to some of the equity in their homes,” said Fries. “Many seniors use this money to supplement Social Security, meet unexpected medical expenses, or make home improvements.”
However, as with other mortgage-related frauds, the agency is seeing inflated appraisals and property flipping. Regulators are also seeing seniors duped into buying financial products not in their best interest and outright thefts of proceeds of the reverse mortgages.
“It is often difficult to discern that a fraud has even occurred until the victim is deceased, since a HECM loan is not due as long as the borrower is living in the house,” Freis said.
The most troubling aspect of HECM fraud is that it takes advantage of our nation’s senior citizens who have worked hard over their entire lives to own their homes said Freis.
To combat these frauds head-on, FinCEN is working closely with HUD-OIG and the Secret Service to proactively analyze data and identify hot-spots of suspected HECM and other mortgage fraud activity, providing law enforcement with a more defined battleground to direct their resources.