Mortgage Fraud is at a High, How to Protect Yourself
Mortgage fraud, both reported and unreported, is seemingly on the rise in Canada, after several reports and news stories this past week came to light. There are two types of mortgage fraud perpetrators: mortgage borrowers looking to qualify for loans they may not have normally, and mortgage lenders. It’s the fraud by mortgage lenders that is causing a lot of stir this week, after a bombshell article was published in the Globe and Mail.
Mortgage fraud is unfortunately an industry-wide problem and more common than you probably think. For Financial Literacy Month, let’s look at how to protect yourself and be aware of it:
How do you identify mortgage fraud?
Mortgage fraud is misrepresentation of information to help you obtain a mortgage, including:
- Inflating your income or misrepresenting your job
- Misrepresenting your income (stating you’re salaried, when you are contract, etc.)
- Not disclosing current debts and/or mortgage loans
- Inflating property value
How can you protect yourself against mortgage fraud?
- Don’t sign a document that has any blanks in it, or a document that you didn’t take the time to read thoroughly (and understand). If you need help understanding it, seek independent legal advice for that.
- No matter how tempting a few thousand dollars might be, never allow anyone to use your name and credit information inexchange for money. It sounds like common sense, but it actually happens a lot more often than you may think.
- Never use false information in your mortgage application. A sketchy mortgage lender may ask you to falsify your employment information to get a mortgage you wouldn’t otherwise qualify for, or that you really can’t afford.
- Never deliberately misrepresent ANY information during the loan process
- Always know who you are dealing with: get recommendations or referrals
- Never sign anything without reading it through carefully
- Seek legal advice
- Never trust anyone offering ‘easy money’ or ‘easy investment’ opportunites. What sounds too good to be true, usually is.
Looking for more resources on preventing mortgage fraud? CMHC has some free resources online. If you have specific questions about protection against mortgage fraud, please feel free to contact me. You can also participate in the conversation on Twitter: #FLM2015 and follow me as well.
