Mortgage fraud is an ongoing problem in Canada that appears to be growing.
According to the Financial Post, in January 2017, Equifax Canada said its data had showed an increase in suspected fraud since 2013.
Canadian Mortgage Trends recently published this article about combatting mortgage fraud.
“Canada’s mortgage origination process itself makes it easy for fraudsters to cheat the system, right from the get-go,” wrote article author Alex Conconi.
“Aside from credit and appraisal, the underwriting process is heavily reliant on borrower-provided documents and information, making it an optimal entry point for fraudsters. As I see it, therein lies the issue—why put the onus on the borrower to provide information when it can be obtained directly from the source?”
The topic of mortgage fraud recently came up at the October 2019 Teranet Market Insight Forum on the industry panel featuring Tim Hudak of OREA, Paul Taylor of Mortgage Professionals Canada, and Dilprit Grewal of CIBC.
Hudak spoke to recent reports from British Columbia about vulnerabilities with money laundering. He said real estate professionals need tools for due diligence. The good news, Hudak said, is that in Ontario that tool already exists.
“It starts with a T and ends with a T,” Hudak said. “Teranet already collects foreign ownership data. … It has an exemplary reputation and is a fantastic example of public-private partnership.”
When asked how mortgage professionals could prevent mortgage fraud, Taylor also looked to technology. “I think more access to data is generally the right answer,” he said. “Data is the new bacon.”
He also mentioned that access to the Canada Revenue Agency (CRA) Line 150 data would be an easy way to help combat potential fraud.
Panel moderator Ron Tite referenced data from Equifax that found 13% of Canadians indicated they felt it was okay to tell a “little white lie” on their mortgage application, 16% said they thought mortgage fraud is a victimless crime, and 8% admitted to omitting a fact on their loan application.
After Tite cited the Equifax data, Grewal connected fraud for shelter with housing affordability, saying that because it is harder to afford a house now, there is a gray line for consumers. Some might be tempted to slightly exaggerate their income to qualify for a bigger deal.
“Clearly we don’t want to be making uninformed credit decisions. We want to understand the risks,” Grewal said. “There are a number of tools with respect to data where we can see whether clients have applied for other credit, what their income was, and other tools to try to verify data.”
As Hudak stated, Teranet is an exemplary tool for mitigating mortgage fraud risk. Through Purview, lenders can access Fraud Check, which provides up to 18 customizable real estate fraud checks that can quickly assess potential suspicious activity and flag applications that warrant further investigation.
Your Purview Report can verify the property ownership, parties on title, estimate available equity, uncover any liens that may be registered against the property, and much more.
Battle mortgage fraud today through accurate, up-to-date property data. Discover how to make the most of your Purview solutions, or gain access to them, by calling 1-855-787-8439 or visiting www.purview.ca.
Purview is just one of Teranet’s Financial Services Solutions; stay tuned for our upcoming portfolio unveiling!