Mortgage Fraud

One thing new home buyers and home owners rarely even tend to consider is the very real danger of mortgage fraud. In this post I will explain exactly what mortgage fraud is, and what you can do to protect yourself and your family from this dangerous practice.

What is Mortgage Fraud?

The CMHC defines mortgage fraud in the following terms:

Mortgage fraud occurs when someone deliberately misrepresents information to obtain mortgage financing that would not have been granted if the truth had been known. This can include:

  • Misstating your position or inflating your income or length of service at your job.
  • Stating you are a salaried/full time employee when you are a contract, part time, hourly or commission-based employee or are self-employed.
  • Misrepresenting the amount and/or source of your down payment.
  • Purchasing a rental property and misrepresenting it as owner-occupied.
  • Not disclosing existing mortgage and/or debt obligations.
  • Misrepresenting property details or omitting information in order to inflate the property value.
  • Adding co-borrowers who will not be residing in the home and do not intend to take responsibility for the mortgage.

What Can You Do to Protect Yourself and Your Family From Mortgage Fraud?

To protect yourself and your family from becoming victims of, or accomplices to mortgage fraud, be an informed consumer. This means:

  • Never deliberately misrepresent information when applying for a mortgage.
  • Never accept money, guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property. If you allow your personal information to be used for a mortgage, even for a brief period, you could be held responsible for the entire debt even after the property is sold.
  • Always know who you are doing business with. Use licensed or accredited mortgage and real estate professionals.
  • Never sign legal documents without reading them thoroughly and being sure you understand them. If uncertain, obtain a second legal opinion or, if necessary, the services of a translator.
  • Get independent legal advice from your own lawyer / notary. Talk to your lawyer / notary about title insurance and other alternative methods of protection.
  • Your lawyer will advise you if anyone other than the seller has a financial interest in the home or if there are any outstanding liens or tax arrears.
  • Contact the local provincial Land Titles Office to obtain the sales history of any property you are thinking about buying, and consider having it inspected and appraised. An accredited appraiser will provide the property sales and MLS history.
  • 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.
  • Be wary of anyone who approaches you with an offer to make "easy money" in real estate. Remember: if a deal sounds too good to be true, it probably is.

For more information on mortgage fraud, and how to protect yourself from it, please visit:

Brandon Jones

Brandon Jones

Sales Representative
CENTURY 21 Miller Real Estate Ltd., Brokerage*
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