My Mortgage Blog

No matter how big or small the "fib"...

...the intentional misrepresentation or omission of information for the purpose of obtaining a mortgage loan or a loan larger than would have been obtained had the lender (or in some cases borrower) known the truth = mortgage fraud. 

A 2017 survey conducted by Equifax (one of two credit reporting agencies in Canada) indicated that 13% of Canadians feel it's "ok to tell a little lie on your mortgage application". While another 16% believe "mortgage fraud is a victimless crime". 1

Make no mistake, mortgage fraud is in fact a crime and it is certainly not victimless. Experts have sited the "estimated" cost to Canadian taxpayers is in the hundreds of millions of dollars each year.  Mortgage fraud costs time and resources to prosecute, leaves homeowners with often inflated home values (leaving them underwater in some cases), or tanks the value of a community (think illegal grow-ops), preys on the unsuspecting and assists with the rise in crime.  Still sound victimless?

And it doesn't stop there; borrowers are not the only culprits. Industry professionals (lawyers, real estate agents, mortgage brokers, bank representatives) can also play a role. Mortgage fraud comes in all shapes and sizes and varies from the individual borrower "telling just a little lie" to syndicated crime. Canadian courts do not accept ignorance as a defense; its up to you to protect yourself.

So now what is an honest and legitimate borrower to do? 

  1. Never deliberately misrepresent or omit information no matter how big or small you consider the omission or misrepresentation to be; be honest about your situation.  There is often a (legitimate) lending solution to meet your needs where you may think there is not. Wait until your situation (job, income, credit) is resolved and move forward then and only then; do not let desperation be your guide.
  2. It is imperative you do your due diligence when choosing who is going to represent you. Be sure you enlist the service of licensed and/or accredited mortgage and real estate professionals. Ensure you have independent legal council and that they and their firm are in good standing with provincial association(s). Visit Mortgage Professionals Canada, RECA (Real Estate Council of Alberta) and the Law Society of Alberta for more information and/or to find a industry member in good standing. 

  3. Ask about Title Insurance and adding your name to a policy for further protection; FCT (title insurance, real estate, recovery solutions) is a great resource for home owners/potential home owners

  4. Don't add your name to a mortgage unless you plan to pay for it.

  5. Do not give your deposit on a home directly to the seller; be sure it is being held "in trust" via the real estate brokerage or lawyer.

Examples of Mortgage Fraud:

  • You are encouraged to state/or choose to state that you plan to live in a property when in fact the intent is to rent the property (often in an attempt to pay less in down payment)
  • You omit the fact you own other properties
  • You are encouraged to/choose to state you make more income (often in an attempt to purchase a larger home than one could typically afford)

  • You are asked to lend your identity on a mortgage application/purchase a property for another individual or entity in exchange for payment

  • You are asked to/choose to state that you are a full time employee when you are not; you are not in a probationary employment period when if fact you are; you are a salaried employee or have guaranteed hours when you are not/do not

Think you may have been the victim of fraud or know of someone involved in fraud? Please visit the Canadian Anti-Fraud Centre (CAFC) website or contact local RCMP to report immediately.

For further information on this or any other mortgage related topics please reach out to the author:

Tanya Appel, AMP | TMG the mortgage group | | 888.679.0178

Works Cited/Resources:

1 Huffpost article - July 21, 2018

CMHC, Genworth, RCMP (websites)