Mortgage Broker Regulators' Council of Canada

The Consequences of Mortgage Fraud

Mortgage fraud has real financial, reputational and even criminal consequences for borrowers and brokers alike. Despite this fact, Equifax Canada data suggests high-risk and suspected fraudulent mortgage activity rose between 2013 and the beginning of 2017, noting a 52 per cent increase in suspected fraudulent mortgage applications.

"We're certainly seeing more mortgage applications being flagged as suspicious by our reporting institutions," said Tara Zecevic, Vice President, Customer Insight at Equifax Canada in January 2017. "While we cannot entirely attribute these increases to consumers overstating personal income or falsifying applications, we do want to remind people that there are serious consequences for making false or inaccurate claims on any loan or mortgage applications. Not only will it stretch your finances, it is in breach of your contractual obligations with the lender, and simply put, it's against the law."

According to data from Equifax's enterprise fraud management solution, 'Falsified Account Statements' and 'Falsified Documents' were the most prominent application tags, as reported by investigators. The other was 'Conflicting Information'. Of those applications flagged, 67 per cent were from Ontario while the next highest was 12 per cent from B.C.

Wide-spread mortgage fraud has negative consequences for society as a whole, including contributing to an “overheated” housing market and increasingly precarious economic conditions. One-in-five Canadians who do not have a mortgage indicated they are nervous they will never own a home because of rising prices.
Little White Lies
With respect to mortgage fraud, the results of the recent Equifax survey showed:
  • 13 per cent of Canadians indicated they felt it was okay to tell 'a little white lie' when applying for a mortgage to get the house they want.
  • 16 per cent said they believe mortgage fraud is a victimless crime
  • 8 per cent admitted to misrepresenting the facts on a credit or loan application
The survey was conducted online using Leger's weekly OMNI via LegerWeb, capturing a representative sample of 1,547 Canadians from across the country. A sample of this size would yield a margin of error of +/- 2.5% 19 times out of 20.