A disbarred Alberta lawyer has earned a two year prison sentence for committing mortgage fraud, among other felonious activities – and what, if anything could a broker have done to stop her?
“There is nothing the broker can double check on; if they go ahead and convince the lender that it was paid out, there is nothing the broker can do,” Mauro Di Cosola of Dominion Lending Centres told MortgageBrokerNews.ca. “Once we’ve satisfied all the qualification requirements from the lender and once the lender has done their due diligence, from that point, our job is done because we’ve satisfied the lender requirements.”
Nicola Alexandra Davis was recently found guilty of defrauding three separate lenders for a total of $1 million by forging documents to attain remortgages for properties that had never been paid off in the first place.
And for Davis -- who had her law licence suspended in 2009 for “conduct deserving of sanction on four citations involving failing to serve her clients in a competent and timely way and failing to be candid to her clients,” according to the Law Society of Alberta’s suspension report – these weren’t here first forays in fraudulence.
In 2010, the former lawyer pleaded guilty to three counts of fraud over $5,000 and three counts of obtaining credit by fraud – one of which included forging the signature of her partner’s late father so she could take ownership of the man’s home.
In the cases of the ill-gotten mortgages, it’s up to the lender to verify that the prior mortgages had been paid off.
“I can’t confirm that the prior mortgage was paid out – that would be lawyers job and who double-checks that, I wouldn’t know,” Di Cosola said. “(Even if I) still go the extra mile – over and above to contact the lawyer and make sure they received the instructions from the lender and an appointment has been set with the client.”
At the end of the day, the onus falls on the lender to do its due diligence to ensure they aren’t being swindled.
“It sounds like the lawyer hoodwinked the bank into believing the mortgages were paid out,” Di Cosola said. “It’s really the lawyer taking advantage of the trust that has been put in their hands.”