Rising interest rates and the new federal government “stress test” are making it harder for Canadians to save enough for a down payment or qualify for a mortgage compared to last year.
As a result mortgage fraud may be on the rise. A recent Equifax Canada study found that the incidence of mortgage fraud has risen 52 per cent since 2013, and that 67 per cent of all fraudulent mortgage applications in Canada originate in Ontario.
Homebuyers aren’t the only ones who commit mortgage fraud; professionals in the home buying process can profit by taking advantage of anxious buyers.
Mortgage fraud has many different faces, but generally it occurs when someone, such as a homebuyer, a mortgage broker, a real estate agent or a lawyer, misrepresents, intentionally withholds facts, lies or exaggerates information to obtain a mortgage that would not have been granted if information had been accurate.
Self-employed, independent contractors, business-for-self, part-time and temporary workers are at greater risk of mortgage fraud.
That’s because it’s often more difficult for them to prove their income, employment status and employment length, as they may not have access to the traditional proof of income documents such as pay stubs and a letter of employment typically provided by an employer.
Independent contractors, business-for-self and self-employed workers particularly, have more difficulty showing the viability and stability of their income source from the past two years. In cases where these workers are not able to provide satisfactory income proof, the impulse to fake or falsify these documents, either themselves or alongside a home buying professional, might lead to trouble.
Self-employed, independent contractors, business-for-self, part-time and temporary workers can take steps to protect themselves and ensure they get off to the right start in their new home.
If you commit mortgage fraud, there may be serious consequences. If you’re caught before the mortgage loan is advanced:
If fraud is detected after you have the home:
If you suspect fraudulent mortgage activity, first report it to your local police or the Canadian Anti-Fraud Centre. If you wish to remain anonymous, you can submit a tip to Crime Stoppers.
You can also report suspected mortgage fraud to FSCO. To learn more about mortgage fraud and how to report it, visit www.fsco.gov.on.ca/mortgage-fraud.
Article provided by the Financial Services Commission of Ontario.
Equifax Canada, January 2017. Mortgage Fraud on the Rise; 13% of Canadians Say ‘a Little White Lie’ is Okay to Get the House You Want.