E. Other Federal Laws and Guidelines (FCRA) and FACTA. USA PATRIOT Act, E-Sing Bank Secrecy Act,
Confidential nature of filing reports
-file a SAR -For immediate attention MLO can contact "appropriate law enforcement" by phone in addition to filing SAR.
Lending Institutions Covered by Title III of the Patriot Act
. Parties subject to the act -federally regulated banks -branches & agencies of foreign banks located w/in US -Non-federally regulated private banks -persons involved in real estate closings & settlements -loan or finance companies -RML & RMO Everyone involved in financing -5 years for record retention
What is a Residential mortgage loan?
A loan that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a residential structure that contains 1-4 units, including, if used as a residence, an individual condominium unit, cooperative unit, mobile home or trailer; or a residential real estate upon which such a structure is constructed or intended to be constructed.
Residential mortgage originator. .
A person who accepts a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.
Uniform Electronic Transactions Act (UETA)
A uniform state act providing a legal framework for electronic transactions giving electronic signatures and records the same validity and enforceability as manual signatures and paper-based transactions.
Adverse Action
Adverse action has the same meaning that it has under the ECOA and means any denial or unfavorable change in insurance coverage, or a denial of employment based on a consumer report.
Length of time a bankruptcy will show on a credit history
Bankruptcies 10 years Liens, judgments, suits, for 7 years
Who is the enforcement authority for "red flag" rules?
CFPB IS PRIMARILY RESPONSIBLE The Federal Trade Commission (FTC) enforces the Red Flags Rule The Red Flags Rule was created by the Federal Trade Commission (FTC), along with other government agencies such as the National Credit Union Administration (NCUA), to help prevent identity theft
Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation Section 114 of FACTA.
FTC Red Flag Rules.
What is the major function of the USA PPATRIOT ACT?
FinCEN investigates identifies, reports info on money laundering and financial crimes. -Establishes consumer identification Program (CIP) -Maintains records 5 years -Created Anti money laundering (AML) -Make reportable on (SAR) Suspicious activity report -Report receipt of currency over 5k which LOWERS Bank Secrecy of 10K
a. Parties subject to Red Flag Rules
Non-depository lenders, such as mortgage bankers and mortgage brokers 1. Financial institutions and to creditors that offer or maintain "covered accounts"
Red Flags for SARs Unusual or Suspicious Applicant Activity
Obvious over-pricing or underpricing of property • requests of payment of loan proceeds to an unrelated third party with no reasonable explanation • Schemes (such as property flipping, flopping, and straw buyers) to generate equity for an immediate subsequent purchase • Questionable refinance or loan modification attempts targeting distressed homeowners • Costumer unusual or suspicious identification documents that cannot be readily verified • Customer provides conflicting information
Red flags
Red flags are suspicious patterns or practices or specific activities that indicate the possibility of identity theft. The law lists five categories of warning signs.
Residential mortgage lender.
Residential mortgage lender. The person to whom the debt arising from a residential mortgage loan is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement, or to whom the obligation is initially assigned at or immediately after settlement.
Suspicious Activity Report (SAR)
Suspicious Activity Report (SAR) is a document that financial institutions must file with the Financial Crimes Enforcement Network (FinCEN) following a suspected incident of money laundering or fraud. These reports are required under the United States Bank Secrecy Act (BSA) of 1970.
Who implements FACTA
The CFPB implements the Fair Credit Reporting Act through Regulation V
Identity Theft Prevention
The FCRA/FACTA strives to prevent fraud and identity theft by truncating numbers on debit/credit cards and financial documents, placing fraud alerts on accounts, and disposing of credit information properly.
Bank Secrecy Act
The act establishing the US Treasury Department as the lead agency for developing regulation in connection with anti-money laundering programs, which require broker/dealers to establish internal compliance procedures to detect abuses.
Who has accès to consumer files or credit reports?
This normally includes creditors, government agencies, insurers, employers, landlords, and some businesses. Additionally, a consumer is entitled to one free credit report from each of the three credit bureaus every 12 months.
Who has the responsibility for investigating, identifying, and reporting information on money laundering and other financial crimes?
Title III of the Patriot Act and the Financial Crimes Enforcement Network (FinCEN)
a. Primary purpose of the USA PATRIOT Act
To help law enforcement monitor communications and control money laundering activity that might be funneling money to terrorists.
customer identification number
Typical customer identification numbers include social security numbers (SSN), individual taxpayer identification numbers (ITIN), passport numbers, and other acceptable forms of identification.
c. Circumstances that required filling a SAR
Under patriot act report receipt of currency in excess of 5,000 -If there is evidence that funds involved in a transaction or attempted transaction may have derived from illegal activity. -If there is evidence that a transaction or attempted transaction was designed to evade the Bank Secrecy Act. -Was not the sort of transaction that the customer would normally be involved or involved in the use of the RMLO to conduct criminal activity. -SARS are filed with FinCEN
Unusual or Suspicious Borrower Activity
Unusual or Suspicious Borrower Activity • Repurchase requests and buy back demands are made under mortgage loan sale agreements • Questionable activity related to early defaults • Insurer notifies RMLO of investigation suspicious claim on a borrower's hazard policy -Las solicitudes de recompra y las demandas de recompra se realizan en virtud de los acuerdos de venta de préstamos hipotecarios • Actividad cuestionable relacionada con incumplimientos pasados. • La aseguradora notifica a RMLO sobre la investigación de un reclamo sospechoso sobre la política de riesgos del prestatario
What is an e-Signature?
What is an e-Signature? An e-signature (electronic signature) is an electronic sound, symbol or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.
How does The Bank Secrecy Act (BSA) defines financial institution ?
as any person doing business as a bank, securities broker/dealer, money services business, telegraph company, casino/card club, a person subject to supervision by any state or federal bank supervisory authority, or a mutual fund. [31 CFR 1010.100(t)]. However, FinCEN extends the definition to "any business entity that makes loans to or finances purchases on behalf of consumers and businesses.
d. Ways to verify a borrower's identity
d. Ways to verify a borrower's identity -Collect info: Name, DOB, ID#(SS#), passport#, Alien ID# -Verify information: use documentation (driver's License, passport) -maintain records of info used and retain for 5YEARS after the date the account is closed. -compare identity of consumer against any list of known or suspected terrorists/terrorist organizations. -notify customers, verbally or in writing that verification of identity is necessary to open a new account.
Fraud Alert
electronic warning placed on your accounts to monitor for suspicious financial activity. Notice that the consumer may be a victim of fraud (including identity theft
Consumer Reporting Agency
engages in the practice of assembling or evaluating, and maintaining, for the purpose of furnishing consumer reports to third parties bearing on a consumer's credit worthiness,
How long the Copy of SAR and original documentation must be maintained?
for 5 years
A covered account
is any personal account, such as checking and savings accounts, credit card accounts, mortgage loans, automobile loans, margin accounts, and cell phone or utility accounts.
Fair Credit Reporting Act
is one of the most important laws that protect consumer identity and credit information. Ensured that information supplied is accrued
Title III -- International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001
is the portion of the Patriot Act that affects mortgage lending transactions.
FACTA's main goals
is to help consumers fight identity theft by giving borrowers the right to see what is in their credit file and to have any errors corrected.
Who is subject to The FACTA Disposal and the GLB (Gramm-Leach-Bliley Act) Rule ?
lenders, mortgage brokers, and other mortgage professionals
what is the fine for obtaining a credit report without proper authorization, or for a credit reporting agency employee who gives a credit report to an unauthorized person?
may be fined up to $5,000 or imprisoned for not more than 2 years, or both.
Identity theft
means a fraud committed using the identifying information of another person,
Creditor
means any person who regularly extends, renews, or continues credit;
The Bank Secrecy Act (BSA) Required
requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000, and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities. Reports filed with FinCEN are done so according to the Suspicious Activity Report (SAR) format.
What happens a consumer is denied credit, employment, or insurance because of information in the credit report?
the denying party must alert the consumer and provide the name, address, and phone number of the credit reporting agency used to support the denial.
The USA PATRIOT Act (Patriot Act)
was passed in 2001 to deter (impedir) and punish terrorist acts in the United States and around the world and to enhance law enforcement investigatory tools
Suspicious Employee Activities
• Employee exhibits a lavish (lujosa) lifestyle that cannot be supported by his or her salary. • Employee fails to conform to recognized policies, procedures, and processes. • Employee is reluctant to take a vacation. El empleado exhibe un estilo de vida lujoso (lujoso) que no puede ser respaldado por su salario. • El empleado no cumple con las políticas, procedimientos y procesos reconocidos. • El empleado es renuente a tomar vacaciones
Categories of red flags
• Fraud or active duty alert on a credit report • Notice of credit freeze in response to a request for a credit report • Notice of address discrepancy • Pattern of activity inconsistent with the person's history • Big increase the use of credit, especially on new accounts • Unusual number of recently established credit relationships • Account that was closed because of an abuse of account privileges
