Fraud Awareness Month – Who Is Committing Mortgage Fraud? We Ask You!

Are you able to tell when a fraud application has crossed your desk? Fraud related to mortgage financing is one of the most challenging things to identify – often because many professionals are guilty of committing it. Many believe their actions to be considered harmless - but they are not!

While Canadian stats regarding mortgage fraud can be a little more difficult to come by than finding stats south of the border, Canadian Mortgage Trends put out a great blog on mortgage fraud that highlights some startling statistics: http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2013/09/fighting-mortgage-fraud.html. Here are just a few:

• According to Equifax, mortgage fraud in Canada has increased by a staggering 50% in recent years.
• Fraud related to mortgages accounted for 13% of attempted fraud in 2011.
• Two thirds, equal to $400 million, was the estimated total of financial fraud in Canada.
• The blog also references a study done in the UK that found that many mortgage brokers were aware of factors that could indicate potential fraud – however only around 50% took extra measures to back up the information in question.

What identifiers are there?

• If a client tells you that they are self-employed but give you a paystub as though they are an employee – this could be fraud.
• If a client tells you that their spouse will sign on a deal but wants to bring the papers home and not allow you to meet the spouse – this could be a sign of fraud.
• If you have a deal that is tight – but if you beefed up the value by $10k, this is fraud….
• And the list goes on and on and on…

If you are committing fraud with eyes wide open, then helping you identify it is quite irrelevant. However, for those of you “helping” your clients get their deals through, you will do more business, build stronger relationships and be better reputed in your industry if you pass on those deals and employ due diligence measures to double check the information that your customers are providing.

At the very minimum, on a new application you should be making all best efforts to verify:

• the identity of your clients
• who is on title to the property
• mortgage history and registered mortgages
• value

If you validate these 4 things, every time, you will quickly catch problem deals – protecting yourself and your lenders and improving the industry as a whole.

Identify issues and validate information and help stop mortgage fraud. Purview For Mortgage Brokers has the tools. Call us today at 1.855.787.8439.