New Rule Would Streamline GSE Fraud Reports

Fraudsters and money-launderers may find it more difficult to move forward with their illicit activities if a new draft rule receives approval.

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Publishing a draft rule in the _Federal Register_ Thursday, the ""Financial Crimes Enforcement Network"":http://www.fincen.gov/ (FinCEN) proposed eliminating the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA) as a middle-man in the reporting process for suspicious activity for GSEs ""Fannie Mae"":http://www.fanniemae.com/portal/index.html and ""Freddie Mac"":http://www.freddiemac.com/.

If green-lighted, the rule would require analysts with the mortgage companies to file any concerns over possible fraudulent and money-laundering activity with FinCEN itself.

""FHFA Acting Director Edward DeMarco lined up a statement in support of the draft ru"":http://www.fhfa.gov/Default.aspx?Page=67le, saying, ""This is a positive step and we are pleased to work with FinCEN on this project. The proposed rule will streamline the process and build on the efforts of FHFA and the GSEs to support law enforcement in its important work to fight mortgage

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fraud.""

Added ""FinCEN Director James Freis, Jr."":http://www.fincen.gov/about_fincen/pdf/bio_director.pdf: ""Providing law enforcement with quicker access to data about potential financial crimes will help them better hold illicit actors accountable for mortgage fraud and other scams.""

According to the statement, FinCEN collaborated closely with the GSEs' federal regulator to ensure that any resulting rule falls within the so-called ""safe harbor"" provisions of the Bank Secrecy Act.

The network tracks a number of suspicious activities related to mortgage fraud, finding in a recent statement that financial institutions reported nearly 30,000 cases of suspected fraud over the second quarter this year.

FinCEN chalked up the gains in mortgage fraud to a significant number of repurchase demands, special filings by other institutions, and activity that occurred before the financial crisis.

The announcement of the draft rule follows a general crackdown on fraud-related matters across the industry.

In a related story, the ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ fulfilled a provision under the Dodd-Frank Act in August by ""joining the Consumer Sentinel Network"":https://themreport.com/articles/cfpb-joins-ftc-consumer-complaint-database-2011-08-15, which will eventually allow the bureau to track complaints from consumers about deceptive mortgage lending practices.

More recently, federal prosecutors ""launched a multi-billion-dollar suit"":https://themreport.com/articles/feds-sue-allied-home-mortgage-allege-834m-fraud-2011-11-01 against ""Allied Home Mortgage Corp."":http://www.alliedhome.com/ for its alleged role in bilking the GSEs and ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration out of nearly $1 billion in insurance claims for which it falsely qualified by misrepresenting loans over the last decade.