NCUA Issues Reverse Mortgage Fraud Alert

The National Credit Union Association issued a regulatory alert warning of the potential for reverse mortgage fraud schemes that strip homeowners of their equity.

“In the current economic environment, the ability of long-term homeowners to access existing home equity quickly through reverse mortgages may make them vulnerable to predators committing financial fraud,” said NCUA.  “Law enforcement has identified new schemes where family members, loan officers, and others effectively steal money from senior citizens in home equity fraud schemes.”

The alert comes after the Financial Crimes Enforcement Network (FinCEN) issued an advisory to highlight reverse-mortgage fraud schemes potentially related to the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) program.

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According to the alert, people or entities perpectrating HECM fraud may seek the services of credit unions for the purpose of receiving, depsoiting or moving funds relating the the scams.

In order to assist law enforcement in efforts to target this type of fraudulent activity, FinCen asks financial institutions to assist them by detailing the activity in their Suspicious Activity Reports.  Read a copy of the alert here.

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  • Seniors should be warned about such schemes. They should also be warned that only those holding NMLS licenses (not registration) have gone through a criminal background check by a government agency.

  • At least the NCUA appears to publicly recognize the risk posed by its own employee originators. And though they play a role, competence and background checks aren't the main issue here. The main point of the warning is one that could affect everyone whether they work in broker or banking distribution: if you receive a reverse mortgage referral, you need to truly understand why it came your way.

    • Bill Idus Martii Peters,

      Admin specifically quotes: “…predators committing financial fraud,” said NCUA. ”Law enforcement has identified new schemes where family members, loan officers, and others effectively steal money….” Here not only are family members specifically named but so are loan officers.

      Are you questioning recidivism among those who prey on seniors financially through fraudulent schemes? Required criminal background checks by independent government agencies are critical in minimizing as much as possible any potential senior financial fraud from among the ranks of Mortgage Loan Originators due to those who have preyed on seniors financially in the past. This is why even nationally chartered financial institutional employees should be subjected to this level of review, no matter what the policy of any bank, credit union, or other lender in screening their reverse mortgage originators.

  • At least the NCUA appears to publicly recognize the risk posed by its own employee originators. And though they play a role, competence and background checks aren’t the main issue here. The main point of the warning is one that could affect everyone whether they work in broker or banking distribution: if you receive a reverse mortgage referral, you need to truly understand why it came your way.

    • Malcolm,

      Since NCUA is making these claims, perhaps you should check with them (unless you are referring to the advisory issued by the Financial Crimes Enforcement Network in which case you should check with them).

  • Bill Idus Martii Peters,rnrnAdmin specifically quotes: “…predators committing financial fraud,u201d said NCUA. u201dLaw enforcement has identified new schemes where family members, loan officers, and others effectively steal money….” Here not only are family members specifically named but so are loan officers.rnrnAre you questioning recidivism among those who prey on seniors financially through fraudulent schemes? Required criminal background checks by independent government agencies are critical in minimizing as much as possible any potential senior financial fraud from among the ranks of Mortgage Loan Originators due to those who have preyed on seniors financially in the past. This is why even nationally chartered financial institutional employees should be subjected to this level of review, no matter what the policy of any bank, credit union, or other lender in screening their reverse mortgage originators.rn rnrn

  • Malcolm,rnrnSince NCUA is making these claims, perhaps you should check with them (unless you are referring to the advisory issued by the Financial Crimes Enforcement Network in which case you should check with them).

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