The Fight Against Mortgage Fraud
The largest investment you and most Canadians will make in your life time will be the purchase of your own home. Regardless if it is your first home or 4th, you go to great lengths to ensure that you feel safe in your home. You insure your home from damage and property theft. You spend money upgrading and decorating our home. You watch your family grow. You…. we love our homes. The challenge lately is our homes are becoming vulnerable to a new crime labeled Real Estate Fraud. An easy process that in most cases is a silent crime or falls on silent ears.
The two common types of Real Estate Fraud are Fraud for Shelter and Fraud for Profit.
With Fraud for Shelter, the consumer typically does not qualify for the home they are trying to purchase. They falsify documents. They encourage other people to purchase for them. They do not disclose the necessary information required for the lenders and insurers to make qualified decisions on affordability.
These individuals are not ‘criminals’ in the traditional form. They watch the news. They see the glorification of crime in movies and media and their perception is, “Everyone Does it!”.
It always amazes me how someone can rationalize what they do, how they act and what they say until they are able to justify it in their own minds. Then they believe it and we all know, “if you believe, they will believe”.
It is a declining value system that directly questions the ethics and personal characteristics of our society. What’s worse, these generally good people are typically the individuals who fall prey to the real fraudsters out there looking for easy targets.
Fraud for Profit, which almost always happens without the knowledge of the homeowner, happens when fraudsters pose as legitimate owners of the home. They place a mortgage on the home and then, walk away with the money. It is only the knock on the door from the Sheriff’s office, when the real homeowner realizes they have been victim to a crime. This type of fraud happens through the submission of forged documents to the lender or through identity theft.
With Real Estate Fraud it is not only the victim that suffers the loss. The entire community feels the impact of the deception. Homes that are forced into foreclosure are bringing down the value in our neighbourhoods. Lenders and Lending institutions raise costs and rates to recoup their losses. Finally, the government bodies step in with stricter guidelines and rules making it more and more difficult for the honest, hard-working purchaser to qualify for a mortgage. Everyone suffers and feels the impact.
As a professional Mortgage Broker, I strongly believe one of my obligations to my clients, is to protect the integrity of this industry that I love and live from. Mortgage Fraud is becoming high on the radars of the Canadian regulatory bodies, and the environment is definitely changing. Precedents set in Canadian Law are holding the lender responsible for mortgage fraud. What does this mean to the consumer? It means, the level of diligence from these lenders is rapidly increasing. Documentation verifying employment, down payment and identity are being scrutinized meticulously. More and more, mortgage brokers are finding that common sense lending is out the door.
We all have legal and ethical responsibilities to tell the truth in everything we do in life. We must obey the law and avoid willful blindness. Safeguard the integrity of documents whether they be our own or those of our peers. Finally, over and above the legal obligations, we need to strive to be better at our moral duties and report inappropriate behaviour.
With Real Estate Fraud everyone can be involved, from the client right up to the bank employee. Lawyers, appraisers, mortgage brokers, realtors and employers everyone can have their hand in the crime.
I went to an industry seminar last week and had the privilege to listen to a great speaker, Chris Mathers a former RCMP undercover officer. I took many things away from his presentation but one of the items that stuck with me was the following statistics he gave out:
10% of the population is really, really good
10% of the populations is really, really bad
80% of the population just depends on how we can be influenced and corrupted.
Don’t be a Victim – be an Informed Consumer.
Spill the Beans – Tell your mortgage broker all your details pertaining to your finances and employment. Never allow someone to encourage you to include false information or leave blanks in your mortgage application.
Know your Responsibilities – If you sign the mortgage documents, you are responsible for the mortgage debt for the life of that mortgage. Even if the home sells, any shortfalls become your legal responsibility.
ILA – Independent Legal Advise – don’t buy a home without it!
Timing is of the Essence – This will be one of largest purchases you are likely to make in your lifetime, what’s the hurry. A strong, planned out approach, with realistic goals will ensure that you are never ‘house poor’, leaving the extra money for a vacation, new furniture, Date Night, etc.
Try, Try, Again – When you find your true dream home, you will see, everything falls into place.
Goals, are you being realistic? – Keep in mind, that the first home does not have to be your forever home. Home is where the heart is not where the biggest house resides.
Use a Professional – Licensed and Accredited Mortgage Brokers and Realtors are educated professionals. Know who you are working with and be sure to recommend the goods ones to your friends and family.
EASY MONEY – It simply doesn’t exist. If someone offer’s you money to use your name and credit profile, this should be a red flag. “The greater the obstacle, the more glory in overcoming it” Moliere.
Be Proactive – Annual checks on your Credit Bureau with Equifax and Transunion, shredding all legal documents, reviewing your bank statements, never giving out personal information on line will all aide in you not becoming the victim of a crime.
If you suspect that you or someone you know has been the victim of mortgage fraud, please contact your local police department or The Canadian Anti-Fraud Centre.
Toll Free: 1-888-495-8501
Toll Free Fax: 1-888-654-9426