Offers to fake your employment history or inflate a property’s value are instant tip offs you could be a party to mortgage fraud.
CBC Marketplace went undercover to ferret out mortgage fraudsters in Ontario and discovered realtors asking for money to make fake documents. In their wake: broken buyers who lost their deposits, homes, or lenders’ trust.
What are common mortgage frauds?
How can mortgage fraud be prevented?
How do I protect myself from mortgage fraud in Canada?
Common Mortgage Frauds to Look Out For
Fraud for Profit
Scamming legitimate lenders to make a profit can be a shell game.
CBC Marketplace’s investigation revealed newcomers with slim credit histories are easy targets for unsavoury real estate agents. Realtors offered fake tax forms and income statements to get mortgages for home buyers who wouldn’t otherwise qualify. See realtor duties to client.
The payoff for realtors — rich commissions and a share of fees charged to falsify documents. Take heed: excessive document or application fees can be a clue you are participating in fraud for profit.
Income or asset inflation hurts buyers most. When mortgage payments become too much to bear, they have little choice but to sell, get a second job, or take in renters. For buyers denied a mortgage, it can mean losing a hard-earned deposit and being sued by the seller. Watch the CBC investigation.
Buyers remorse Ontario — what’s the penalty for buyer not closing on time?
Fraud for Housing
Not all perpetrators are professionals. Buyers and business partners commit fraud when they misrepresent that they plan to live in an investment property.
Suggesting an income property will be a family home can result in generous mortgage approvals. Tax treatments by Canada Revenue Agency are more favourable for principal residences. Foreign buyers can even avoid extra taxes or bans on purchasing Ontario real estate. Who pays foreign buyers tax Ontario.
But the consequences are no different. Buyers and their collaborators can face “debanking” by lenders who refuse to offer their services (chequing included) and being arrested. Our tip to investors: if you want an income property mortgage and principal residence status, plan to live on site. Consider buying a rooming house or building a secondary suite, coach house, or laneway home to live in.
What’s Being Done About Stopping Mortgage Fraud
Truth North Mortgage, which aided CBC’s investigation, says the practice hurts Ontario’s housing market by causing panic sales by buyers. Read True North’s response. Likewise, the Toronto Region Real Estate Board (TTRED) wants shady realtors exposed so future buyers don’t suffer the same fate.
How is mortgage fraud detected in Ontario? Self-policing by scrupulous mortgage brokers and lenders helps Ontario financial regulators find the perpetrators. That’s key, because underwriting or approving fake applications can result in prison sentences for realtors and mortgage lenders.
Ways to Protect Yourself From Mortgage Fraud
Mortgage fraud can happen anywhere, but occurs most often in Ontario. That may be because it’s Canada’s largest province by population. Private mortgages Ontario lenders offer.
You can protect yourself by:
- Getting title insurance through Axess Law when you buy a home or land.
- Dealing with lenders you trust. Go to the Better Business Bureau (BBB) scam tracker or talk to your local BBB.
- Checking mortgage brokers are registered with the Financial Services Regulatory Authority of Ontario. Confirm a mortgage broker is licensed.
- Talking to your lender or Axess Law real estate lawyer to ensure you fully understand the mortgage amount and terms being offered. A simple check on the Internet can verify if the amount you qualify for is appropriate for your income and debts. Who uses portable mortgages.
- Complaining about a shady realtor to the Real Estate Council of Ontario (RECO). The Province regulates realtors through the Trust in Real Estate Services Act, 2020. That act replaces the Real Estate and Business Brokers Act, 2002, and allows RECO’s registrar to fine, suspend, or charge realtors, require them to take training, or remove their licence. Make a complaint about an Ontario realtor.
Why You Need a Real Estate Lawyer
Your Axess Law real estate lawyer protects your interests in what could be the largest financial transaction of your life. Our seasoned legal professionals can ensure your offer to purchase takes potential problems into account before and after you buy.
Your Ontario real estate attorney can ensure the agreement of purchase and sale is valid. We explain what your offer means and how to make changes or additions. If your sale is delayed by a home appraisal that falls short of your offer, we talk with the seller’s lawyer. Axess Law acts on your behalf to solve problems that delay or can prevent a home purchase. Questions to ask real estate lawyers.
Completion dates in your agreement of sale and purchase may leave you in a bind. Your Axess Law real estate lawyer requests an extension if the closing date is unreasonable. We liaise with your mortgage lender to sign legal documents required for temporary bridge financing while you await the sale of your current home. What your real estate lawyer does.
When the deal is done, we search title to your property and transfer your new home into your name. Adding spouse to title can be done when you buy or later. Making a property title transfer (Ontario).
Affordable Legal Services, Anywhere in Ontario
Access lawyers for less in the Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
Use a virtual real estate lawyer.
Go Online or Phone Toll Free to Book a Lawyer
Make legal appointments that work for you with our online booking form or call toll free to 1-877-402-4277 (647-479-0118 in the Greater Toronto Area) to speak with our staff. Axess Law’s licensed real estate lawyers can meet with you at any of our conveniently located Greater Toronto Area or Ottawa law offices.
We have onsite parking, and easy transit access to make your appointment go quicker.