The Office of Federal Housing Enterprise Oversight, or OFHEO, has finalized a regulation requiring mortgage giants Fannie Mae and Freddie Mac to report mortgage fraud in a timely fashion, OFHEO said today.
The regulation has been finalized for publication in the Federal Register and will be effective 30 days from publication, OFHEO said in a statement.
Mortgage fraud continues to increase in the United States, with the number of suspicious activity reports to the Federal Bureau of Investigation in 2004 almost triple those in 2003, according to a report by the FBI released in May.
In addition to requiring reporting of fraud to OFHEO, the regulation requires the two government-sponsored 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 overseeing body said.
“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,” Pollard said.
Complete text of the final regulation can be found at www.ofheo.gov/media/pdf/finalmortfraud72505.pdf.
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