OFAC

I recently ran across my first OFAC hit and thought I would share my experience in hopes it may educate others who have not experienced an OFAC hit. 

OFAC is the abbreviation for Office of Foreign Assets Control. It is the specific branch of the United States Department of the Treasury that administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.

OFAC searches are a requirement of Section 326 of the United States Patriot Act which states that, among other things, in addition to verifying every borrower’s identity we must determine whether the customer appears on any list of suspected terrorists or terrorist organizations. In most if not all cases, your credit bureau is likely running the borrower data through OFAC listings and rendering a determination with the credit report. If your company utilizes any third party compliance or quality control related software, you may also receive OFAC checks and alerts there as well.


So what should you do if you DO get an OFAC alert on the credit report or other resource that may be used in the required OFAC search process? First, never assume that the hit is golden. You always need to assume that your borrower is “innocent until proven guilty” when it comes to an OFAC hit because there can be a lot of false positives. The Treasury Department provides a helpful guide that tells you exactly how to go about evaluating the OFAC information. I followed these steps personally and was able to eventually rule out that I had a 100% accurate match.
You can access these steps in entirely at http://www.treas.gov/offices/enforcement/ofac/regulations/faccr.pdf.

1. Is the “hit” or “match” listed on the credit re port against OFAC’s SDN list or
targeted countries, or is it “hitting” for some other rea son (i.e., Control List or
PEP, CIA, Non-Cooperative Countries and Territories, Canadian Consolidated
List (OSFI), World Bank Debarred Parties, Blocked Officials File, or government
official of a designated country), or can you tell what the hit is?

• If the name is hitting against OFAC’s SDN list or targeted countries.

• If it is hitting for some other reason, you should contact the “keeper” of
which ever other list the match is hitting against. For questions about:

1) The Denied Persons List and the Entities List, please contact the Bureau of Industry and Security at the U.S. Department of Commerce at
202-482-4811,

(2) The FBI’s Most Wanted List or any other FBI-issued watch list, please see the Federal Bureau of Investigation’s website at www.fbi.gov/con tact/fo/fo.htm,

(3) The Debarred Parties List, please contact the Office of Defense Trade Controls at the U.S. Department of State, 202-663-2700,

(4) The Bank Secrecy Act and the USA PATRIOT Act, please contact the Financial Crimes Enforcement Network (FinCEN) at 1-800-949-2732.

If you are unsure whom to contact, please contact the provider of the interdict software that told you there was a hit.

If you are able to exclude your borrower based on file documentation or knowledge, be sure to clearly document the file and make sure that you communicate your research to the underwriter with your loan submission and maintain the explanations and documentation in the file in case of future audit.

If you have the need to request additional documentation from your borrower in order to exclude the borrower from the OFAC hit. You may wish to provide your borrower with or direct your borrower to the following informative consumer brochure explaining more about OFAC: http://www.treas.gov/offices/enforcement/ofac/regulations/cons.pdf

If you have reason to know or believe that allowing this person to do business in
the United States would violate any of the Regulations, you should call the hotline and explain this knowledge or belief.

Lastly, I feel it’s important to communicate the potential fines and penalties for violating the regulations that require institutions to conduct and review OFAC lists for potential matches. I warn you, these are hefty which is why it’s so important that you get yourself into the habit of watching for the OFAC information on each and every loan file. The fines for violations can be substantial. Depending on the program, criminal penalties can include fines ranging from $50,000 to $10,000,000 and imprisonment ranging from 10 to 30 years for willful violations. Depending on the program, civil penalties range from $250,000 or twice the amount of each underlying transaction to $1,075,000 for each ofac violation.

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FHA Appraisers Requirements Starting October 1

RE: Mortgagee Letter 2008-39 

To meet the new eligibility requirement that takes effect for cases requested on and after October 1st, FHA appraisers must be certified by the state in which the property to be appraised is located, or by a nationally recognized professional organization.

  

Organizations include the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, the Appraisal Institute, the Appraisers Association of America, the International Association of Assessing Officers, the International Right of Way Association, the Massachusetts Board of Real Estate Appraisers, the National Association of Independent Fee Appraisers, and the National Association of Master Appraisers. Links to each website, which includes search capabilities, can be found by accessing http://www.appraisalfoundation.org/s_appraisal/sec.asp?CID=15&DID=15.

If, on or after October 1, 2009, an FHA-approved lender enters an appraisal assignment into FHA Connection for a property from a FHA Roster Appraiser who is licensed but not certified in accordance with the Mortgagee Letter, the appraisal will be unacceptable for FHA-insured financing and a second appraisal, performed by a state certified appraiser, must be completed at the lender’s expense.

  

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The Importance of Credit

The Importance of Credit


Credit scores and credit requirements have moved to the front of lending guidelines. For better or worse, time and time again I’ve learned how little consumers really know and understand about credit. I think our government and our educators do a pretty terrible job at teaching consumers what is really important about their credit history and about credit reporting in general. .

Everyone should do the following: Go to www.annualcreditreport.com and request your free credit report from each of the three major credit bureaus. There is no charge for this service and in fact, it is your legal right. A federal law called the Fair Credit Reporting Act (FCRA) provides that every consumer is entitled to request and receive a copy of his/her free credit report at least once annually from each of the three major credit reporting companies.

I have used the information to help many borrowers monitor and repair their outdated, duplicated and erroneous credit reports at absolutely no cost to them. Beware of other credit companies that advertise and try to sell you “free” credit reports. The ONLY federally approved website appointed to comply with the Fair Credit Reporting Act is www.annualcreditreport.com.
By requesting and receiving your report from each of the three major bureaus, Experian, Equifax and TransUnion, you will want to review the data for accuracy and make notes of those tradelines that are not reflecting correct and current data. If you find that any of the data is duplicated, inaccurate, not rated current, or that doesn’t even belong to you, you have the ability to dispute those tradelines and to request an investigation. These procedures are clearly outlined in the FTC bulletin called How to Dispute Credit Report Errors. The bureaus have 30 days in which to complete their investigation and you will be notified of their findings when the investigation is complete.

The entire process is simple, secure and most importantly, it is absolutely FREE to you as the consumer! Ignore all of those other credit companies that offer you their services with fees and charges. They are NOT offering you anything that you cannot accomplish yourself without cost! Anyone can handle these processes and will be much wiser as a result. In addition, corrections to the reported data may render improved higher fico scores in many cases.

The FTC also provides other bulletins that provide additional pointers and information such as the booklet Building a Better Credit Report,Getting Credit: What you Need to Know About Credit, Credit and Divorce, and Need Credit or Insurance? Your Credit Score Determines What You’ll Pay. I have used these resources many times over the years to assist family members, friends and borrowers learn more about their credit reports and repair their erroneous credit.

Take this opportunity to read up and educate yourself on credit and be sure to pass the information on to others who may benefit as well!
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