A customer applied for a mortagage and told our lender that his lawyer told him to take as much equity out of his property to try and "hide" assets so he would qualify for medicaid. We won't be doing the loan but does this warrant a SAR?

It sounds like loan fraud to me. I would file.

Is it fraud, or is he just misunderstanding what his lawyer said. I can't imagine his lawyer instructing him to commit mortgage fraud. But maybe he was???

I would not classify it as loan fraud based upon the post but we have filed SARs for hiding assets for receiving government benefits. Unfortunately we haven't received any requests for supporting docs so we don't have any feedback on the SARs.

Did his counsel probably state "In order to hide assets, you should consider fraud."? Probably not. But my understanding is that submitting a false/fraudulent loan application is MLF and requires a SAR.

Did the attorney say to borrow because debt reduces equity? That is also a common strategy on student loans, recommended to many. Are you reporting those as well? Where is the fraud? They must pay the $ back.

I am not necessarily thrilled with it, but the debt is legitimate.

i've heard many a customer state an attorney told them to hide assets, put cash in safe deposit boxes, put accounts in kids names, hoard cash, make deposits under $10,000 so it doesn't get reported...

Oh, I can. Not in those words, but I've definitely heard of people 'advising' those who are approaching a certain age to start divesting themselves of traceable assets to qualify for government assistance.

The original post asked about a SAR for mortgage fraud and nothing that has been stated indicates that loan fraud might be occurring. Public assistance fraud/hiding asssets is another story.

I read the OP as a Customer applied for a loan and the loan application contained a fraudulent or inaccurate statement regarding the purpose of the loan. Subsequent discussions with the customer revealed that the customer suggested that they were trying to hide assets to qualify for medicaid. If this understanding is accurate, I stand by my original comments.

If I'm mistaken in my understanding of the events, then a perhaps a SAR is not justified.