FHFA: Fannie, Freddie Working On Tools To Catch Mtge Fraud

The regulator for Fannie Mae (FNM) and Freddie Mac (FRE) said Wednesday the mortgage giants were working on new efforts to crack down on mortgage fraud.

Federal Housing Finance Agency Director James B. Lockhart said he hopes to soon unveil the tools, which would be in addition to rules the government-sponsored enterprises announced in January to catch fraud.

Mortgage fraud has been on the rise in the aftermath of the housing bust, as lenders have scrutinized mortgage applications more carefully and reined in mortgage credit.

The number of mortgage fraud reports last year climbed 26% from a year earlier, according to a study released this week by the Mortgage Asset Research Institute.

Fannie and Freddie in January announced new rules requiring mortgage originators and appraisers to provide identifying data on loans sold to the companies. The rules won't take effect until Jan. 1, 2010.

"Additional efforts to expand mortgage fraud prevention and detection are under consideration by the enterprises and their industry partners, and I hope to be reporting on them soon," Lockhart said at a Women in Housing and Finance symposium.

-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; [e-mail]