Equifax: 'Staggering' mortgage application fraud

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Equifax Canada is describing the sheer volume of attempted fraud last year as “staggering,” with almost two-thirds of it coming from mortgage seekers.

“The greatest dollar value of detected fraud activity is within mortgage applications, at over $400 million," Equifax Canada John Russo said Tuesday. "This staggering dollar figure illustrates the need for continued vigilance by financial institutions to reduce this threat to both consumers and lenders."

That figure is derived from Equifax's fraud solution database for the financial sector, which revealed a total of more than $650 million in fraud incidents detected across Canada in 2011.

Still, the dollar value around mortgage-application fraud accounted for more than 60 per cent of that $650 million worth of dubious deals. The actual number of mortgage fraud incidents accounted for about 13 per cent of the total number of fraud application incidents, according to Equifax.

The highest relative fraud detection rates came in April and May – the busiest part of the spring season. November and December marked the lowest period of attempted fraud.

More and more, fraudsters are using made-up identities, erecting a credit history around those names and seeking credit. While that activity represented as few as 300 cases in 2006, they accounted for more than 2,500 in Equifax’s national database last year.

And while the credit bureau isn’t offering an exact breakdown on how many fraudulent applications were submitted via mortgage professionals, broker channel lenders and default insurers are increasingly calling on underwriters to better detect and weed out fraudulent applications.

In fact, for the latest CAAMP-Maritz report, lenders and banks cited fraud as one of their leading concerns about dealing with brokers – a perennial worry mortgage professionals largely view as unwarranted.

  • broker on 2012-02-22 3:22:47 AM

    Yes however the article only mentioned brokers not the branch network where more fraud occurs especially fraud for housing

  • Max Cafissi- Broker; Alliston, ON. on 2012-02-22 5:05:07 AM

    Your article insinuates that, according to Equifax, Mortgage Brokers are the primary cause of this Mortgage fraud. My personal experience over the past year has been that Bank Mortgage Reps would probably be a higher percentage of the perpetrators. I encountered at least 2 incidents where applicants wanted me to present an application in such a manner as to make it appear that they were moving into a house as a principal residence when in fact, it was being purchased as an Income property. While this does not represent "fraud" in so far as stealing someone's identity, it is still a form of fraud and it is the most common form, along with "fraud for shelter" ( ie falsifying income in order to qualify to purchase ). As far as Equifax is concerned, they should concentrate more on confirming the accuracy of the information they report on people's files and updating derogatory items that have been paid, than trying to implicate Mortgage Brokers for incidents of fraud. Nothing that all Canadian Brokers have ever done with regards to fraud can ever match the fraudulent Banksters in the U.S. Can Canadian Bankers be far behind ?

  • Elfie Hayes on 2012-02-22 5:48:20 AM

    I have actually been approached to use documents that a client paid to "have created" through a Road rep at one of Canada's largest banks.
    The woman did not have a job, (something I knew for certain) and wanted to buy a house. She went to a road rep and was sent her to her contact for proof of income documents. She paid $1600.00 to have a full set of BFS docs created by someone who then referred her to another person from the same bank. The docs included NOA, T1 Generals etc.

    The woman did not like the rate and terms offered, so she called me and said all the hard work was done. I asked her to explain what she meant and she said she paid for her proof of income and wanted to get her mortgage through my office. She said all I had to do was submit the app. Needless to say I refused.

    So why are brokers always painted with the fraud brush. As someone who chose this career and wants to make a living at it for a long time, fraud is the last thing on my agenda! I know of a lot of other great Mortgage Agents who feel the same way. Sign me: Tired of being branded as a fraudster by the perpetrator!

  • AB Broker on 2012-02-22 9:59:49 AM

    One thing is for certain, there are bad apples in every industry. I challenge the big brokerage houses root out and push those unethical types out of the industry and not to continue to protect them because they bring in larger volumes. You know who they are, quit talking the talk and walk the walk!

    I know of bank roadies whose employer sent them packing. Guess where they are now? In the mortgage broker industry!! Our governing bodies need to do more due diligence, period!

    Have a great 2012 everyone!

    On with the mortgage revolution!

  • Joseph Park on 2012-02-22 11:18:15 AM

    After reading "Equifax: 'Staggering' mortgage application fraud", I felt sad and sighed and said to myself, “there are still good brokers or agents out there…” I have been working in mortgage industry for more than 10 years and have experience in working as a mobile mortgage specialist and broker world. I have seen the bank mortgage agents and mortgage brokers engaging fraud activities and many of them leave the industry with bad reputations. I just sent an email to my team members (20 agents) stating that agent with fraudulent activities will result in termination with the firm. I am positive that most of brokers who think seriously about working in this financial environment will be smiling when unethical or cheaters exits the industry. I have met so many mortgage brokers who have been working more than 10 years in this industry saying, “cannot bother with the stuff (fraud)”. Some mortgage brokers say, “I have better things to do”. I would like to say, “I go to bed and sleep well”. Elfie Hayes has mentioned that he/she is tired of being branded as a fraudster by the perpetrator! And I agree with her.

  • Joseph Park on 2012-02-22 11:20:16 AM

    After reading "Equifax: 'Staggering' mortgage application fraud", I was dissapointed and felt sad that it is the mortgage broker

  • Jacquie Mitchell on 2012-02-22 12:01:30 PM

    In my opinion this is a poorly written article. The two paragraphs I have read and reread..

    Still, the numbers around mortgage-application fraud accounted for more than 60 per cent of those dubious deals.

    The actual number of mortgage fraud incidents accounted for only about 13 per cent of the total number of fraud application incidents, according to Equifax.

    Beg me to ask.... WHAT???

    This all just seems like more Equifax garbage to me.

  • Clifton on 2012-02-25 6:11:59 AM

    I agree with some of the comments above. I have run in to a ton of Bank reps asking me to help them with fraudulent deals. I have never met a single mortgage broker/agent that has asked to do such things. I'd have to say it's mostly the banks and their reps involved in the fraud and not the independent agents that work for the brokerage.

  • Longtime lender on 2012-02-25 6:45:49 AM

    One thing is certain, fraud is still rampant in the industry. There are good agents and bad agents, but I don't think one can point a finger at all "Bank Reps" and single them out as the biggest offenders.
    Having been in the mortgage business for over 17 years as a lender, I have seen fraud from every source: Client, RE agent, broker, lawyer... Sometimes, it's difficult to pinpoint the exact source of the fraud, and mortgage brokers are often just one link in the chain, so it's important as a broker to ensure that you know your client and your source of business. Every precaution should be taken to ensure that your deal and docs are legitimate. Unfortunately, the submitting broker of a deal that happens to be fraud (even if that broker had nothing to do with it) is still considered a "risk" to the lender.

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