Feds Say The’re Concerned About Reverse Mortgage Fraud
ByRegulators Say They Are Concerned About Reverse Mortgage Fraud
Recently, Origination News conducted a roundtable with several members of the American Association of Residential Mortgage Regulators’ board of directors at the group’s annual conference in Savannah, Ga. In the following excerpt, ON’s Lew Sichelman has a conversation with immediate past president David Bleicken (deputy secretary for banking in Pennsylvania) and new president Mark Pearce (deputy commissioner of banks in North Carolina) about reverse mortgages and fraud.
LEW: David, you mentioned reverse mortgages as an area of possible fraud. The reverse mortgage lenders trade group (The National Association of Reverse Mortgage Lenders) has said they’ve heard these complaints, but they added they’ve gone out and searched the records and can’t find any or hardly any instances of fraud being committed. What do you guys say?
DAVID: The fraud is related to the cross selling of the product. You get a bundle of money and people swoop in and sell them securities products they shouldn’t have. But also, there are also straw buyer types of schemes out there to grab the money and run. In Pennsylvania, depending you slice the pie, we are one of the oldest states (that is having an older population) in the country, second only to Florida as a percentage of population. And we’re exceptionally concerned about, not only the current fraud that is out there but also the potential for that fraud to develop.
MARK: I would add to that, that it is too early to see a lot of enforcement actions related to fraud in the reverse mortgage area. The reverse mortgage area has really boomed, as the subprime area collapsed. There is a lag time between the boom in that industry and regulatory or law enforcement scrutiny and then the investigation of that activity to bring an effective prosecution. We are at the early of that, but I know of a number of regulators who are currently investigating issues related to reverse mortgages.