The Real Estate Council of Alberta (RECA) recently released an eye-opening blog speaking to a rise in mortgage fraud in Canada. Their blog references findings from an Equifax Canada survey where respondents were comprised of more than 1500 Canadians from across the nation.
According to the blog, there has been a 52% increase in suspected fraudulent mortgage applications in Canada since 2013 – with a whopping 67% increase in Ontario.
Less shocking was that the top 3 forms of fraud reported included falsified account statements, falsified documents, and conflicting information on applications. We think this is less shocking because you are on the front lines and probably encounter these from time to time or even all the time.
What is perhaps more shocking was the admission of some respondents that:
- It’s ok to tell little white lies on a mortgage application (13%)
- 8% admit to going as far as misrepresenting facts on a credit or loan application in the past
Even more problematic is that 16% believe that mortgage fraud is a victimless crime!
Does the number of people thinking that mortgage fraud is a victimless crime support the large number of people who seem to think it is ok to intentionally misrepresent their information in order to get approved for a mortgage?
It is more critical than ever to take certain steps to avoid an applicant getting one over on you. Here are some ideas:
Talk to third parties. Get consent from your applicant for third parties to provide you with information directly and use it! This is a very effective way to verify information on the employment letter and validate the information in documents provided by your applicant.
Reconcile information. Conflicting information can be uncovered simply by comparing documents provided by your applicant against one another. For example, check the net pay amounts on pay stubs provided against the actual bank deposits.
Independently verify what you can. There is a wide range of information that you can validate on your own to identify conflicting information between what your applicant told you and what the truth is. You can independently validate information like who the legal homeowner of a property is, registered mortgages, liens and more. You can even validate the stated value of a property. This can be done without contacting the bank or ordering a full appraisal.
As the RECA article demonstrates, Canadians are not, as a whole, opposed to committing mortgage fraud – and are doing so on a regular basis. Sometimes, the belief that it doesn’t really hurt anyone is enough to make it justifiable. That just means we all have to be more diligent to stop it in its tracks.
For more information about how you can mitigate mortgage fraud please visit Purview For Mortgage Brokers today at http://purviewforbrokers.ca/.