Mortgage fraud can be an incredibly damaging situation financially and can cost you thousands of dollars if discovered. Thankfully, there are a variety of ways to protect yourself and spot when you may be a victim of or accomplice in mortgage fraud.
Mortgage Fraud: The Basics
Mortgage fraud is a financial crime where someone misrepresents information deliberately to obtain mortgage financing that would have been turned down otherwise. This includes, but isn’t limited too:
- Purchasing rental property and misrepresenting it.
- Not disclosing existing mortgage and/or debt obligations.
- Adding co-borrowers who won’t be residing in the home and don’t intend to take responsibility for the mortgage.
- Misrepresenting the amount and/or source of your down payment.
Another form of mortgage fraud is the “straw buyer,” which is someone who puts their name on a mortgage application on behalf of another. In turn, the straw buyer is offered some form of incentivized reward. They are also often deceived into believing they won’t be responsible for any payments.
As a consequence of mortgage fraud, straw buyers and those who misrepresent their information will not only be financially liable for any shortfall but can also face criminal charges.
How Can You Protect Yourself?
One of the best ways to protect yourself against mortgage fraud is to be an informed consumer. That means:
- Never deliberately misrepresenting yourself on a mortgage application.
- Always knowing who you’re doing business with. Always use licensed or accredited mortgage and real estate professionals.
- Never accepting money, guaranteeing a loan, or adding your name to a mortgage unless you’re intending to purchase the property. If you allow your personal information to be used for a mortgage, you could be held financially responsible.
- Never signing legal documents without thoroughly reading and understanding them. If you’re uncertain, obtain a second legal opinion or a translator if necessary.
- That if a deposit is required, make sure the funds are payable to and held “in trust” by the vendor’s realty company or a lawyer/notary.
- Being wary of anyone offering you “easy money” in real estate. Remember, if a deal sounds too good to be true, it likely is.
If you suspect you’re a victim of fraud or someone you know is a victim, contact your local police or The Canadian Anti-Fraud Centre immediately.
Mortgage Makers Inc. has been Edmonton’s best family-run mortgage broker for over 25 years. It’s our goal to provide our clients access to licensed Mortgage Professionals alongside the best mortgage rates and mortgage services. Give us a call at 780-436-0390 or email us at [email protected] and let us know how we can be of service.