Month: July 2021

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) influences process of establishing the advantages of Suspicious Activity Report (SAR) filings for non-bank residential lenders and originators. Currently within the Bank Secrecy Act (BSA), only banks and loan companies are required to file SARs.

In December 2010, FinCEN published a Notice of Proposed Rulemaking from the Federal Register using the intent to give the SAR requirement to feature non-bank residential loan officers and originators. In the past, the Mortgage Bankers Association (MBA) did to this end from the development of a Suspicious Mortgage Activity Report, or SMARt Form, for non-bank loan officers and other mortgage professionals not currently covered within the BSA’s lender SAR filing requirement.

However, FinCEN is currently seeking to bring the reporting requirement for the non-bank banks and originators with the existing BSA SAR filing programs and, again, MBA is providing assistance from the ultimate shaping with the final rule to best accommodate mortgage professionals.

The inclusion of non-bank residential mortgage brokers and originators inside SAR requirement has arisen from article on FinCEN’s suspected mortgage fraud reports who have indicated that many in the SAR filings concerning mortgage related fraud were initiated by non-bank loan officers and originators.

The notice of proposed rulemaking from the Federal Register explains “[r]esidential loan officers and originators (e.g., independent mortgage companies and lenders) are primary providers of mortgage finance-in many cases dealing directly using the consumer-and will be in a unique position to gauge and identify money laundering risks and fraud while directly assisting consumers using financial needs and protecting them from your abuses of economic crime.” (75 CFR 76677)

Proposed Applicability

The proposed rule incorporated many in the same guidelines since the current SAR filing requirements for other banking institutions, however much with the BSA anti-money laundering provisions are not included. The streamlining from the requirement is meant to be less burdensome to mortgage lending professionals as well as allow for customization specific for the mortgage lending industry.

The proposed rule is defined to apply to loan or boat finance companies, limited at the moment to residential mortgage brokers and originators. Under the proposed rule, a residential mortgage company is defined as “[t]he person to whom the debt as a result of a residential home mortgage is initially payable for the face with the evidence of indebtedness or, if you have no such proof of indebtedness, by agreement, or even whom the obligation is initially assigned at or soon after settlement.” A residential mortgage originator means a person who “takes a residential home mortgage application and will be offering or negotiates relation to a residential home loan for compensation or gain.” (75 CFR 76677)

Under the actual definition, a SAR filing is essential when: “A loan or finance company… knows, suspects, or has reason to suspect how the transaction: (i) involves funds produced by illegal activity or possibly intended or conducted to disguise of disguise funds or assets based on illegal activity; (ii) is made, whether through structuring or any other means, to evade the requirements in the BSA; (iii) doesn’t have a business of apparent lawful purpose; or (iv) requires the use with the loan or finance company to facilitate criminal activity.” (75 CFR 76677)

The rulemaking process regarding the mortgage lending SAR requirement is ongoing. Once the rule continues to be finalized, FinCEN provides further guidance and instructions concerning applicability and compliance using the resulting new regulations.

Of course the kids are becoming more of a handful every day, the two of them are involved in a conspiracy to drive me over the edge some days. They love the new place though. We promised them a dog and bought them this beautiful German Shepherd, who has already appointed herself their bodyguard. She is a puppy, but already rather frightening if she thinks you are going to beat a tiny butt. We might have to replace some of the fence after the sewer root removal company got done repairing some damage to the septic field. We had to take down the tree that caused it, which was not a big loss even if it was a big expense. They had to bring in a bucket truck to do the job and that meant that they had to take down two sections of fence. At any rate the cost was unexpected and it made a huge mess, but we are going to be able to handle it fairly well.

Aside from that everything has been going quite well. I love the location, since I can get in my truck and be at the office in around 10 to 15 minutes depending on traffic. It was taking me about 40 minutes on a good day before we moved out here. Tina’s mother is about as far away and she is delighted to watch the children while we are at work. She shows up bright and early before we are awake some days, some times she brings the makings of a huge breakfast if she thinks we do not have eggs and bacon and such. I do not mind that too much. When we come home she has often baked a pie or made the kids chocolate chip cookies. They seem to run wild in the back yard most days.