Brokers react to investigation about mortgage fraud

Brokers react to investigation about mortgage fraud

Brokers react to investigation about mortgage fraud Mortgage fraud exists – and brokers will be the first to admit that – but it isn’t nearly as prevalent as some make it seem, according to industry professionals.

“One in 1,300 files contains an element of fraud, maybe, and even those aren’t going into foreclosure,” Dustan Woodhouse, a B.C.-based broker with Dominion Lending Centres, told MortgageBrokerNews.ca. “The media is going to take a story with an element of sensationalism in it and roll with it.”

Woodhouse was speaking in response to a Globe and Mail article entitled “How mortgage fraud is thriving in Canada’s hot market.”

The original Globe and Mail article has piqued the interest of brokers across the country. Many have commended writer Tamsin McMahon’s balanced reporting, which included mortgage brokers, bankers, and insurers, among others.

The article discusses a TD rep who willingly manipulated documents to get a mortgage approved for a client. The head of the provincial Financial Institutions Commission blamed TD and not the rep – pointing to immense pressure to cross-sell banking products.

It also mentions how certain clients fudge their own documents willingly, in the hopes to qualifying for mortgages. It’s a practice referred to as “soft fraud” or “fraud for shelter.”

And it’s something brokers have encountered.

“Does mortgage fraud exist? Of course – every industry has an element of fraud because human beings want to take shortcuts. Is it rampant? No,” Woodhouse said. “The key is to know your clients – my own business is referral-based only, and I refuse to work with clients who say they Googled me.”

For his part, Chad Robinson, a broker with 360 Best Interest Mortgages Inc., believes tighter lending guidelines are influencing clients to submit fraudulent documents.

“As rules are tightening I believe we will see more of this type of fraud. It is important that as brokers and agents we look at all employment letters and paystubs,” Robinson said. “Pay particular attention to clients that have several inquiries on the bureau, sometimes they have learnt was not to say at the previous lender or broker.”

Robinson, himself, has had two instances of clients lying about job information on application documents.

Click here to access the original article.
17 Comments
  • Ron Butler 2015-11-03 9:35:11 AM
    "I refuse to work with clients who say they Googled me" that is the most interesting thing I have heard from a professional salesperson in the last couple of months.
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  • Dustan Woodhouse 2015-11-03 9:58:56 AM
    To be clear re the 'one in thirteen hundred' comment, I was referencing the math of the one billion in suspect Hometrust mortgages reported on in the story in the context of a 1.3 trillion dollar market.

    Those files it is worth noting are also outperforming the non suspect files. A bit ironic, but also indicative of the 'fraud for shelter' angle.

    Another thing that keeps outright mortgage fraud low is that whoever signs on the dotted line is signing a full recourse loan. Unlike in the US where in most states a home owner can toss the keys to the bank and walk away, in Canada a mortgage lender will follow the person in default to the ends of the earth and garnishee wages.

    This is a large part of why forclosures in Canada are as low as they are. 0.21% currently, down from a high of 0.43% or so in 2009.
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  • Steve 2015-11-03 10:09:30 AM
    Whats a TD guy doing sending deals to Scotia?
    Why is TD largely at fault for their employee creating fake job letter?
    The poor client was suspended from her job! What did TD or this guy do for the poor client?
    and FICOM... where is the bar on performance expectations?
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