Fraud in Canada – Outcomes of Fraud Awareness Month Group Feedback

Fraud in Canada continues to cost the entire mortgage industry as a whole – big time. It really has a trickledown effect, often damaging relationships between lenders and brokers. With so many different types of fraud in Canada it can be daunting to stay on top of the latest and greatest techniques for dealing with fraud.

This was the precise reason that we dedicated the month of June to fraud awareness. We can only prevent fraud if we work together to increase awareness of different types of fraud in Canada and how to identify them.

We thought we would take a moment to shout out some of the mortgage professionals who contributed excellent insights in group threads on fraud prevention. Here are some of the consolidated contributions by topic which we are sure many will find useful.

Fraud related to employment status

Laurie Post, mortgage professional said:

“I still call the employer to validate verbally or request it in writing. I had at one time a borrower who hand-carried the letter from his employer....excuse me? Not acceptable.” This bodes to the point that independent verification of employment and receiving the client’s job letter directly from the employer are two excellent ways to mitigate fraud by employment status.

On the topic of identity theft…

HannifHighclass, private mortgage lender and mortgage broker with Genie Sabre Realty Inc. said:

“Am not sure how often fraudulent mortgages are happening in Canada but it’s happening on a large scale. Close friends of mine were innocent victims of identity theft involving mortgage and title fraud. Unknown individuals posed as the purported vendors and as a purported purchaser. These individuals completed a fraudulent transfer of the condominium from the real owner’s names into a fake buyer’s name and then obtained a mortgage loan from the bank. The individuals who orchestrated this fraud then disappeared with the proceeds of the mortgage. Thank their lucky star after a lengthy & an expensive court case they got back the title to the condo home and the mortgage was withdrawn.”

This very personal story is worth sharing because it shows us that we must take every step possible to identify identity theft including independently verifying the home ownership information, validating signatures. This easily could have happened because a broker took on the deal and took the initial documents presented at face value. Always dig, dig, dig!

On the topic of mortgage fraud in general we had several very constructive contributions

Gerry Caden, retired bank manager said:

“And of course another major danger is where the purchaser of the property is, for instance, a solicitor who is also dealing with the legal aspects of the purchase. These types of situations are wide open to abuse/fraud which is why it is most important for a lender to ensure that there is no undue influence affecting any party to the transaction I.e. that a junior partner in a law firm is not assigned to complete the legals for a senior partner’s property purchase. And that all outside professional parties to a property deal are all properly qualified and registered with the relative supervising authority for the industry and hold proper professional insurance.”

This insight from the lender’s side is worth highlighting. As a mortgage broker or agent you are positioned to protect every party to the transaction after the initial mortgage application. Pay attention to how close your client is to the lawyer on the transaction, especially if the client is a lawyer and is insisting that another lawyer they know or even works within their firm is being pushed to be the lawyer who closes the transaction.

Mal Eccles, Director at IMBA and President/Broker at CIR Mortgage Group pointed out that FSCO is making fighting fraud a priority by including new guidelines “FSCO will be announcing new guidelines for Mortgage Brokers and Agents to follow later this Month. They will address that one major issue, FRAUD. Mortgage Brokers/Agents will do well to read the new guidelines and implement them in their day to day practice.”

Echoing the thoughts of Jyothi suseela Rajan on a similarly themed thread in another group, Graham McWaters AMP, identity theft protection expert and President of FMP Mortgage Investments contributed that “It's imperative that you “Know Your Client”. Verify their IDs up front and get copies of driver's license, Passport and other photo IDs. Ask your clients numerous questions. Do applications face to face in their place of residence when possible. In today's fast moving high tech world we get caught up in electronic apps and no face to face time with our most valuable asset: the client. Do your due diligence and you will reduce fraud.”

Mark White, Co-owner of superiorfinancialsolutions.net added “Not Asking for valid ID is a risk indeed. It is important that we first verify that our clients are who they say they are as well as verifying all the documents we receive on an application to assure we do our due diligence. These simple steps will be of value in maintaining good relationships with our clients.”

Having lenders, agents, and brokers involved in the conversation provides different perspectives on this very serious issue. Let’s keep the conversation going! Jump on our Facebook page at https://www.facebook.com/purviewformortgagebrokers or Tweet us @Purview4Brokers sharing your tips on how, as an industry, we can combat fraud. Stories, examples of what you have seen, as well as solutions and ideas are all welcomed!

Purview For Mortgage Brokers is committed to helping stop real estate fraud in Canada. Contact us today to learn about the tools you can use to mitigate your risk: 1.855.787.8439.