OFHEO Finalizes Regulation on Mortgage Fraud
August 29, 2005
Washington, D.C. — The Office of Federal Housing Enterprise Oversight (OFHEO) has finalized regulations requiring Fannie Mae and Freddie Mac (the “Enterprises”) to report mortgage fraud or possible mortgage fraud in a timely fashion. The regulation, effective 30 days from publication, is the product of a notice and comment rulemaking.
In addition to requiring reporting of fraud to OFHEO, the regulation requires the Enterprises to maintain adequate internal controls, procedures, and training programs to assure an effective system to detect and report actual or possible mortgage fraud. OFHEO’s examination force will review information received, which will help in assessing internal controls, security efforts, management of risks, and other factors at the Enterprises. In addition, OFHEO is developing a process for sharing relevant mortgage fraud information with other federal agencies.
“The regulation makes transparent OFHEO’s oversight of Enterprise initiatives to detect mortgage fraud at the earliest possible time,” said 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. We believe the Enterprises are committed to this effort,” Pollard said.
“OFHEO appreciates the valuable assistance of the Federal Bureau of Investigation, the Department of the Treasury, and the Financial Crimes Enforcement Network (FinCEN) and the support of members of the President’s Corporate Fraud Task Force,” added Pollard.
In addition to the final regulation, OFHEO has finalized a Policy Guidance detailing procedures for implementing the regulation.