NCUA Issues Alert On HECM Fraud Activities

by MortgageOrb.com on Monday 19 July 2010

The National Credit Union Administration (NCUA) has issued a regulatory alert warning credit unions of potential home equity fraud schemes, with a specific focus on suspicious reverse mortgage activity.

"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," NCUA said. "Law enforcement has identified new schemes where family members, loan officers and others effectively steal money from senior citizens in home equity fraud schemes."

NCUA follows an April alert issued by the Financial Crimes Enforcement Network highlighting reverse mortgage fraud schemes tied to the Federal Housing Administration's home equity conversion mortgage (HECM) program. NCUA urged that credit unions "make sure to review the examples of common fraud schemes and potential red flags for fraudulent activity related to home equity."

NCUA also cautioned credit unions regarding the status of the borrower involved in a potential HECM scam. "In many cases, a senior homeowner is a victim of the scam and therefore should not be listed as a suspect," NCUA added. "However, a homeowner can be listed as a suspect if there is reason to believe the homeowner knowingly participated in the fraudulent activity."



SOURCE: NCUA