Magazine article Mortgage Banking

OFHEO Finalizes Regulation on Mortgage Fraud

Magazine article Mortgage Banking

OFHEO Finalizes Regulation on Mortgage Fraud

Article excerpt

THE OFFICE OF FEDERAL HOUSING ENTERprise Oversight (OFHEO) issued its final regulation requiring Fannie Mae and Freddie Mac to report mortgage fraud or possible mortgage fraud in a timely manner. The final rule, effective 30 days after publication in the Federal Register, was issued following comments on the proposed regulation collected in February.

In addition to requiring the reporting of fraud to OFHEO, the regulation would require the GSEs to maintain adequate internal controls, procedures and training programs to assure an effective system to detect and report actual or possible mortgage fraud.

The regulation is an effort to lend transparency to OFHEO's oversight of Fannie and Freddie's efforts to detect mortgage fraud at the earliest possible time, according to OFHEO Acting Deputy Director Alfred Pollard.

"This oversight, coupled with enterprise efforts, will send a clear message that fraud will be actively resisted by the companies and their regulator," said Pollard.

OFHEO revised its definition of the term "mortgage fraud" to clarify that it covers mortgage-backed securities (MBS) issued or guaranteed by a GSE. …

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