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.
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.