During a Mortgage Fraud Schemes and Trends for 2011 panel at the recent Mortgage Bankers Association conference, an FBI fraud fighter showed slides of advertisements that featured the familiar faces of celebrities serving as pitchmen for a certain type of financial product.
The agent noted how the well-known figures on the screen, “including ‘The Fonz’,” were leading senior citizens to believe there was no downside in the reverse mortgage products they were selling.
“Essentially we’re seeing the same three types of [fraud] schemes in reverse mortgages today,” the agent, Christa Lynn Greco, told the audience attending a Mortgage Bankers Association conference in Hollywood, Fla., continuing on to paint a challenging picture of the product sector. “Reverse mortgage fraud [scams] are insidious because they involve our seniors—people 62 or older; they’re no doc loans and the kicker is they are FHA-insured. It’s a concern for us,” Greco said.
Tim Mowery, special agent in charge, Office of Inspector General – Investigations, Florida-Caribbean Region 14 HUD, talked of “elderly people who don’t have their full faculties who are being preyed upon by these guys talking them into reverse mortgages. It’s going to be a real battle in the future,” Mowery warned, “because it’s hard to detect.”
He described one “HECM scheme” in which fraudsters “are giving [seniors] a few thousand dollars to move into a house with furniture and pictures that look real good and they get a reverse mortgage and, then, these guys take the money and walk away. There’s an unbelievable number of different schemes we’re seeing in central and south Florida,” according to Mowery, “targeting Hispanic or African-American groups.”
Government agencies such as the Financial Crimes Enforcement Network (FinCEN) have started working closely with HUD’s Inspector General and the Secret Service (Department of Homeland Security) 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.
Written by Neil Morse
