The door is now open for the Office of Federal Housing Enterprise Oversight to report incidents of mortgage fraud discovered by Fannie Mae and Freddie Mac to the Federal Bureau of Investigation and other law enforcement agencies.OFHEO has worked out an agreement with the Financial Crimes Enforcement Network (FinCEN) to share suspicious activity reports with law enforcement agencies without causing legal liability for the two government sponsored enterprises. Unlike banks, which are protected by the Bank Secrecy Act, persons named in fraud reports can sue the GSEs. "OFHEO and FinCEN understand that Suspicious Mortgage Information reported by OFHEO shall not be construed to be information provided to FinCEN by Fannie Mae and Freddie Mac," the agreement states. Last July, OFHEO issued a final rule that requires the two GSEs to report incidents of mortgage fraud to examiners. OFHEO general counsel Alfred Pollard told a conference that mortgage fraud can occur in a down market as well as an up market. "It's a complex market, with millions of multi-faceted, multi-state transactions, and the rewards for very sophisticated crooks are high," he told the Mortgage Bankers Association's conference in Chicago.

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