The Financial Crimes Enforcement Network on Tuesday cautioned lenders about the fraud risks of reverse mortgages.
Its advisory warned of fraud schemes against senior citizens who are part of the Federal Housing Administration's reverse mortgage program, which now accounts for nearly 100% of that market.
"The most troubling aspect of [home equity conversion mortgage] fraud is that it takes advantage of senior citizens who have worked hard over their entire lives to own their homes," said Fincen Director James Freis. "To combat these frauds head-on, Fincen is working closely with HUD's inspector general and the Secret Service to proactively identify hot spots of suspected HECM and other mortgage fraud activity and directly provide to law enforcement a more defined battleground to direct their resources."
Fincen reported new trends and schemes, including cross-selling, which involves the theft of a senior citizen's loan proceeds by selling financial products in violation of HUD rules, property flipping, fake down payments and power of attorney abuse.