FHFA Creates Anti-Fraud Program for GSEs
The Federal Housing Finance Agency has established an anti-fraud initiative ensuring that regulated entities are not exposed to unnecessary risk when doing business with individuals or companies that have a history of fraudulent conduct.
Through the Suspended Counterparty Program, Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks will be required to notify the FHFA whenever a business affiliate has engaged in fraud or any type of financial wrongdoing.
Additionally, the FHFA will consider information it receives from other government sources, too, to determine if a company has a troubled history.
The FHFA will then determine whether the individual or company should be suspended from doing business with both the GSEs and the FHLBs. All affected parties who are found to have participated in fraudulent activities will have an opportunity to prove to the conservator that they should not be suspended.
In appropriate cases, the FHFA will issue orders directing the regulated entities to stop doing business based on their history of fraud.
This anti-fraud program goes into effect on Aug. 15.