Top three mortgage frauds and how to spot them

Top three mortgage frauds and how to spot them

Top three mortgage frauds and how to spot them

Mortgage fraudsters are upping their game in this soft market, and brokers need to remain vigilant to avoid getting caught in their web, according to industry experts, identifying the latest fraud indicators to look out for.

“Many brokers can use the excuse that they were not aware of their client’s activities,” according to Jim McGregor, director of alternate channel credit at Coast Capital Savings. “However, as licensed individuals, brokers are responsible for the authenticity and accuracy of documents they submit for mortgage applications on behalf of their clients.”

A New Brunswick case is highlighting the consequences of outright fraudulent behaviour on the part of brokers, but those mortgage professionals also face suspension, loss of license for failing to catch the fraudulent activity of clients. And even the slightest whiff of a police investigation can be enough to tarnish the reputation of even an industry veteran, he said.

“For instance, the use of so-called straw buyers to front for syndicates is a common form of identity fraud that has been linked by police to homes bought for use in a marijuana grow op,” he explained. “Brokers need to make sure of the identity of their client.”

Here’s a partial list, of mortgage fraud red flags to look out for, courtesy of the Real Estate Council of Alberta.

Identity fraud red flags:

  • Client refuses to or can’t provide photo ID
  • Land title records do not match with seller information
  • Buyer is a numbered company seeking a high-ratio mortgage
  • Buyer is using different names or variation of his names in purchasing many properties with high ratio mortgage
  • Buyer’s or seller’s names are partially indicated in documents. For example, only initials and last name appears
  • Buyer is purchasing investment property, but does not own a principal residence
  • Source of deposit cheques is other than the buyer or cash or money order is used for deposit

(Cont. to page 2: Income misrepresentation red flag)

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  • Andy 2012-10-04 5:03:03 AM
    Then there’s the not so savvy attempted fraudsters: I had a client last month ask me if she could just “white out” the CRA balance owing on her NOA. I said “Well, I’m certain that you have the ability to do it, but if you send it to me I have to call the RCMP.” Then I fired her explaining that I would now have to treat all her supporting documents as questionable and that I just wasn’t prepared to continue our relationship if I couldn’t trust her AND I wasn’t prepared to put any of my lenders, and my very valuable lender relationships, at risk.

    All of us want to get paid, but if any of us ever gets even a whiff that something’s not right, the best thing to do is err on the side of caution and walk away because our hard-earned reputations are worth far more than any amount of money, and the hassles of an investigation would end up jamming up valuable time that could be better used to service HONEST clients.
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  • John Dearin RPA,. AMP. 2012-10-04 8:09:41 PM
    If Andy wants a job in NL, call, there is one waiting.
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