Mortgage brokers can help fight fraud by checking their client’s backgrounds, says a title insurance provider, which investigates $120,000 of suspected mortgage and title fraud every day.
“Since 2009, the fraud‐detecting experts in our underwriting department have uncovered indications of potential fraud valued at over $100 million in residential mortgages and real estate transactions from all sources,” Eric Haslett, FCT’s vice‐president legal, claims and chief underwriter told MortgageBrokerNews. “Recently, we identified two suspicious transactions which had a combined value of over $1.1 million within a three‐day period alone.”
The latest CAAMP-Maritz report indicated lenders and banks considered fraud one of their leading concerns about dealing with brokers – a perennial worry mortgage professionals largely view as unwarranted.
Haslett says some simple steps can help brokers ensure their clients are genuine. He recommends brokers get to know their clients, including why they picked a specific broker or company and who referred them. It is also a good idea to check details on identification and credit bureau reports to ensure the information is consistent, and the client is familiar with the details.
He also offers two warning signs: if the mortgage amount is significantly higher than the property value or if there seems to be a rush to closing.
“If there is no clear reason why the client wants to close the deal ASAP and the client does not seem overly interested in shopping around for the best mortgage it may be an indication that they have other interests in the deal closing fast,” he said.
In a recent case FCT underwriters flagged a $675,000 mortgage and purchase transaction when they found the address of the borrower’s driver licence was a vacant lot; the signature on the licence did not match the signature on some of the agreement documents; and the height of the purchaser on his citizenship card was seven centimetres taller than on his driver’s licence.
In February Mortgage Broker News reported Equifax Canada’s figures showing mortgage fraud had the greatest dollar value of fraud activity at more than $400 million.
"This staggering dollar figure illustrates the need for continued vigilance by financial institutions to reduce this threat to both consumers and lenders," said Equifax vice-president, legal counsel John Russo.