The new Financial Investigative Unit (FIU)

Download The new Financial Investigative Unit (FIU)

The benefits of integrating mortgage fraud into a larger enterprise and anti-money laundering control and prevention framework

Despite fewer mortgage originations, mortgage loan fraud appears to be on the rise in the United States and the number of reported fraud cases is expected to rise, as experts warn that losses won’t peak until the latter half of 2010. In fact, mortgage fraud is the third most reported offense to the Financial Crimes Enforcement Network (FinCEN). Mortgage fraud's financial impact is reaching financial institutions, lenders, borrowers, and beginning to trickle into communities. Mortgage fraud drains financial institutions’ loan-loss reserves, profits, liquidity levels, and capitalization ratios, while forcing lenders to increase mortgage pricing and fees to recoup loan losses. Furthermore, mortgage fraud artificially inflates home values and property taxes, creating long-term consequences for homeowners and communities.

Lenders must take action in anticipation of the escalating loan fraud problem. They should look for ways to reduce costs and mortgage losses while creating long-term sustainable solutions agile enough to evolve even as fraudsters tailor their criminal activity to undermine new and improved controls. The solution lies in a centralized Financial Intelligence Unit (FIU) that consolidates the capabilities from mortgage fraud, anti-money laundering (AML), and other anti-fraud units while leaving necessary differences, such as transaction surveillance, decentralized.