Mortgage Fraud in Canada: Have Electronic Mortgage Documents Resulted in More Fraud?

This past month it became legal to for you to sign the following legal agreements electronically: Agreements of Purchase and Sale, Deeds, Transfers of Land and mortgage documents. This is because of a recent amendment to the Electronic Commerce Act. This amendment will make the buying and selling of land that much easier, leaving some to wonder if electronic signing of documents will lead to more mortgage fraud in Canada.

One key to mitigating mortgage fraud in Canada after this change is to ensure that, at the beginning of the process, you obtain identification from the applicant and verify it. Once this has occurred you may establish a comfort level to sign the balance of the mortgage documents electronically.

In the case of mortgage brokering, the signing of electronic mortgage documents will mean that you don’t have to make clients come into the office at every stage in the mortgage financing process. You will be able to email clients electronic mortgage documents where they can electronically sign and deliver back to you.

This change in the law is going to take some brokers that much closer to having a completely digital/paperless process.

·        Paperless: Application stage – application is entered into Filogix, credit report is requested digitally. Many brokers at this point will also pull a report and request a property report that verifies home ownership information, sales history, registered mortgages and an AVM that confirms the value range for the subject property.

·        Paperless: Lender receives deal from the broker, and while assessing the deal for approval, requests an AVM to validate value. Once everything checks out, the approval will be sent back to the broker.

·        Document Signing - Will now be paperless: this was the one administration heavy part of the mortgage closing process that now will also be digitalized.

To be prepared to make the switch to negotiating more of your documents electronically you will need to look at different tools that enable electronic signing such as DocuSign. You will also need a plan to deal with how documents will be stored.

Creating client folders is always a good idea because it gives you an organized place to store applications, AVMs, approvals, signed mortgage documents and supporting documents by the client.

Overall, this change in the law has proven to be a welcome one for the real estate and mortgage industry. As long as real estate sale representatives and mortgage agents and brokers do their due diligence to validate the identities of their customers, electronic document signing brings positive change.

For more information please visit Purview For Mortgage Brokers today at www.purviewforbrokers.ca