Mortgage brokers’ toolkits include a section on fraud prevention. This is a good thing.
The Canadian Anti-Fraud Centre is expected to generate $1.3 billion in revenue by 2023. More than 63,000 documents have been processed Fraud caused staggering losses of $569,000,000. The Anti-Fraud Centre believes that these figures are likely to underestimate the real extent of fraud. 5-10% Reports of fraud incidents have been made. Fraud can affect anyone but older Canadians in particular are vulnerable.
Equifax reports that mortgage fraud is the most common form of deception in financial matters. 30 % higher than levels pre-pandemic. Mortgage brokers must be vigilant, and know what to look out for in order to protect their clients against fraud.
Mortgage fraud is a type of crime.
Mortgage fraud involves deliberately falsifying information in order to obtain mortgage loans, or better mortgage terms. Mortgage fraud perpetrators can range from people who exploit loopholes, to insiders in the industry or family members. Mortgage fraud is motivated by a variety of factors, including the desire to own a home, increasing interest rates or a potential financial gain.
Mortgage fraud types
You can also find out more about the following: Canada Mortgage and Housing Corporation The (CHMC), outlines several mortgage fraud types to be on the lookout for. The following are some examples:
- Fraudulent commissions It occurs when brokers and others work together to increase their commissions by obtaining mortgages.
- Fraud to profit A perpetrator will work with an accomplice to artificially inflate the price of a home, and then use that to mislead a lender about its true value. Fraudsters use the mortgage loan process to take money from homeowners and lenders.
- The fraud of shelter. When false documents, usually pertaining to the fraudulent person’s credit or income history, are submitted in order to get a larger loan.
- Scams involving straw buyers They are usually intermediaries who pose as buyers and apply for mortgages on homes that they do not intend to pay off.
- Real estate title fraud. The title fraud is a serious matter. Theft of a home owner’s legal ownership and identity using a fake ID or forgery. Fraudsters refinance the house or try to sell it without homeowner knowledge. According to FCT, title insurance companies, at least one attempt of fraud on a title occurs every four working days.
In early June, Ontario passed a law that provides a powerful defense against predatory loan schemes that target homeowners and older Canadians.
You can also find out more about the following: The Homeowner Protection Act of 2024 The registration of consumer “Notices of Security Interest” (NOSIs) on titles is prohibited. NOSIs that are currently registered for consumer products on titles will be deemed expired.
Scammers who use NOSIs prey upon people looking to upgrade their home or essentials such as furnaces and hot water tanks. A NOSI is a claim that would be placed on a title, similar to a lien.
Unsuspecting homeowners sign contracts for equipment rentals and don’t realize that their property is subject to financial claims. They were faced with high interest charges and demands to repay the equipment when they tried to refinance or sell their home.
The fraudsters often targeted older Canadians because they were a vulnerable group. They were easy targets because of their limited support network and that they are more likely to be at home during the day, answering the phone or the door.
The Ontario Government has taken a major step in putting an end to the abuse of elderly Canadians. The battle against predatory loans continues.
Fraud: How to identify the signs
Mortgage brokers should be on the lookout for any signs of fraud in real estate. The following are some of the signs that you may be dealing with fraud. Red flags Watch out for
- False information is encouraged on the mortgage application by clients
- A reluctance to disclose crucial details
- Mortgages that are significantly more expensive than the actual value of the home
- Property inspections can be a source of discouragement
- Parties that use initials, different names or partial names
- People who do not sign or leave other parts of the application blank
Avoid being targeted by avoiding using this service
Here are some tips to help you and your client avoid fraud:
- They should be honest and candid when applying for a loan
- Tell them not to sign on to another person’s mortgage without a payment plan.
- You can also recommend that you seek legal counsel.
- Encourage them to carry out thorough property inspections
- Encourage them to check the credentials of all real estate agents
You can educate your customers to identify potential fraud in the mortgage industry and help them avoid falling prey to scams.
HomeEquity Bank protects its clients
HomeEquity Bank The provider of CHIP Reverse mortgageHomeEquity Bank’s leaders are committed to creating a culture of integrity, encouraging all employees to act with courage and do what is right. HomeEquity Bank leaders encourage all their employees to be courageous and act on what they believe is right.
HomeEquity Bank employees receive training on how to identify suspicious activities. Its commitment to protecting clients from fraud is based on its customer-centric strategy and the unwavering support for those aged 55+.
HomeEquity Bank is committed to strengthening its partnership with mortgage brokers in order to empower and protect older Canadians. Together, we unlock the full potential of clients’ houses, allowing them to enjoy a happy and secure retirement. HomeEquity Bank will help you build a better future for your client. HomeEquity Bank Contact BDM/BDA Visit our website or call us today to learn more. Website For more information, please click here.