What is Mortgage Fraud?
Mortgage fraud happens when a consumer is fully aware that they are misrepresenting information during the purchase or agreement of financing for a house. There has been a large increase of this fraud in Canada alongside the swelling market. As the real estate market grew, so did the number of mortgage fraud cases. There are many different ways that mortgage fraud can occur, and it carries serious implications.
Examples of how mortgage fraud can happen
The Canada Mortgage and Housing Corporation (CMHC) does a great job in outlining the different factors that can result in mortgage fraud. These instances outline how a potential borrower can receive mortgage financing that they normally wouldn’t be if the truth was known:
- Misstating your job position, inflating your income or exaggerating your time served with a company
- Claiming full-time employment when you are self-employed, contracted, part-time, hourly or commission-based employee
- Claiming a rental property as an owner-occupied property after purchase
- Failing to disclose prior debt obligation or existing mortgages
- Inflating a property’s value by misrepresenting the property’s details, or omitting information about it
- Making the addition of ‘co-borrowers’ who will not be residing in the declared property/house and have no intention of taking responsibility for the mortgage
Another form of fraud that the CMHC outlines is the use of a ‘straw buyer.’ This happens when the person committing the fraud convinces an individual with good credit to use their name on the mortgage application. They can be tricked in to this by being rewarded with cash or high returns for their participation. In most cases, straw buyers are deceived into thinking that they will hold no financial responsibility.
How you can protect yourself from mortgage fraud
While some of the advice might seem like common sense, some of it is more complicated. When looking to buy a house you want to be sure that you are protecting yourself and your family and to always make sure you are informed on the issue. The CMHC outlines another list of tips to ensure that you know how to protect yourself from fraud:
- Always avoid deliberate misrepresentation of information when applying for a mortgage
- If you do not fully intend to buy a property, do not accept money, guarantee a loan or add your name to a mortgage. If you allow your information to be used, you can be held accountable for any financing, defaulting or debt, even after the property is sold
- Be sure to know who you’re dealing with. Use a licensed or accredited mortgage and real estate professional
- Before signing any legal documents, be sure you understand it. Read it thoroughly, and if needed, seek legal advice for a second opinion
Things to keep in mind
You always want to make sure that yourself and your loved ones are protected from harm. Especially when making a big change in your life, like buying or financing a house. Moving forward with a mortgage can be a big step, and overlooking something can drastically change the outcome.
You want to be sure that you know every document you are signing, and fully understand them. You also want to know who you are working with. Hummingbird Lawyers can work with you to make sure that you understand your application, and what to do along every step of the way.
In the event of mortgage fraud, or the accusation of it. Hummingbird Lawyers’civil litigation lawyer can litigate for you and resolve a dispute in your best interest. If you are considering bringing this matter to the courts, contact the team today for more information on your next steps.