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Fraud Prevention Month: Do You Think Mortgage Fraud is on the Rise?
It’s fraud prevention month in Canada. This month, organizations from law enforcement to lenders to consumer institutions and more will share critical information and resources to help individuals and businesses prevent fraud.
This is especially relevant to you because you are the go-between for the public and your lenders. This places you in a precarious position because your lenders depend on you to identify potential mortgage fraud when underwriting a deal being submitted to them.
This can sometimes be a challenging task, especially in a hot real estate market where some are indicating that mortgage fraud is on the rise. For example, in a recent article in the Globe and Mail, the topic of a surge in mortgage fraud in Canada was discussed in-depth – check it out here: http://www.theglobeandmail.com/real-estate/mortgage-fraud-rising-in-canadas-hottest-housing-market/article33570435/.
According to Equifax, since 2013 there has been a 52% rise in the number of mortgage applications flagged as potentially being fraudulent. B.C. and Ontario have led the way, which is no surprise given the fact that they have two of the hottest real estate markets in the country – Toronto and Vancouver. Ontario was the winner (or loser, depending on how you look at it) with the most potentially fraudulent mortgage applications – Equifax reported that 67% of applications flagged for fraud came from Ontario!
What forms of mortgage fraud were reported?
- Fake or altered employment letters, bank statements and/or tax returns
- Money laundering
- Identity theft
The fraud was primarily perpetrated by the mortgage applicants themselves. One thing that stood out in the article was that 13% of Canadians told Equifax that they believed it was ok to tell ‘little white lies’ when applying for a mortgage and that 16% viewed mortgage fraud as a victimless crime. Would you agree? It’s fair to say that, when a broker is involved, there are far more than just the lender facing consequences. In fact, there is a victim involved when the deal is arranged through an agent or broker – the agent or broker.
As you know, most in your profession are independent, not salaried employees of a major corporation that can absorb this kind of issue. Fraud present in your applications can destroy your business because you are dependent on lenders to fund your deals. The presence of fraud on deals can lead to you becoming blacklisted.
It is absolutely critical to invest in tools and technology that can help you learn more about the properties and individuals being financed to avoid getting caught up in a fraud scheme.
For information about how you can reduce the risk of becoming a victim of applicants committing fraud and the tools to help you investigate your applications in greater detail, please visit http://purview.ca/.
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