By: Vesna Spehar, Account Manager, Client Relations at Canada Mortgage and Housing Corporation
As Fraud Prevention Month comes to a close and home buying season begins, remember that if you plan on purchasing a home there are simple steps you can take to avoid becoming a victim of mortgage fraud.
Mortgage fraud occurs when someone deliberately misrepresents information in order to get mortgage financing that would not have been approved if the truth had been known. This can take several forms – from misstating one’s employment, to inflating one’s income, length of service, or agreeing to be a “straw buyer” where one signs onto a mortgage application on behalf of another person.
Borrowers who misrepresent information or allow their name to be used in the purchase of a home are committing mortgage fraud. They will be responsible for any financial shortfall should the mortgage default and may also be held criminally responsible.
Protecting yourself from this kind of activity comes down to being an informed consumer. Remember: if a deal sounds too good to be true, it probably is. To protect yourself and your family, follow these guidelines:
- Never deliberately misrepresent information when applying for a mortgage
- Never accept money, guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property
- Always know who you are doing business with and never sign anything without understanding exactly what you are signing
- Use a licensed or accredited mortgage and real estate professional
- Get independent legal advice from your own lawyer/notary and talk to them about title insurance and alternative methods of protection
- Contact the local provincial land titles office to obtain the sales history of any property you are thinking about buying and consider having it inspected and appraised.
- Find out from your lawyer if anyone other than the seller has a financial interest in the home or if there are any outstanding liens or tax arrears
- If a deposit is required, make sure the funds are payable to, and held “in trust” by, the vendor’s realty company or by a lawyer/notary
For more information, visit Canada Mortgage and Housing Corporation’s website.
If you suspect that you or someone you know has been a victim of mortgage fraud, please contact your local police department or the Canadian Anti-Fraud Centre.