Here's some useful information from CMHC on Mortgage Fraud: This type of fraud occurs when someone deliberately misrepresents information on a loan application, to obtain mortgage financing that likely would not have been approved if the truth had been known.
There are several different forms of mortgage fraud. One of the most common is when a con artist convinces someone with good credit to act as a "straw buyer".
A sraw buyer is someone who agrees to put his/her name on a mortgage application for a home that someone else will be buying. Mortgage applications for straw buyers also often misrepresent other important information as well, such as their income, occupation and the real source of a down payment. In return for their participation, straw buyers may be offered cash or promised high returns when the property is sold.
While the promise of an easy payday may be tempting, consumers should be aware that in most cases, the fraudsters are the ones who walk away with all the profits, while the straw buyer is left "holding the bag" when the mortgage defaults. Consumers who knowingly take part in these frauds will also be responsible for any shortfalls when the property is resold and could even be held criminally responsible for their misrepresentation.
Stay tuned for more on what you can do to protect yourself!