In real estate, some corporations and consumers knowingly misrepresent properties in order to obtain financing and advantages that they wouldn’t otherwise receive with the truth in hand. This is mortgage fraud, and it’s illegal. Sadly, mortgage fraud in Canada does occur. It applies to any sort of fraudulent action relating to acquiring a mortgage, oftentimes with the lenders being the victims. Homeowners and buyers can also be the victim of mortgage fraud if they have been misled or defrauded by mortgage brokers and creditors in the process of trying to acquire financing.
Any borrower who misrepresents information about a property to acquire a mortgage unlawfully is liable for financial shortfalls should there be a default. Furthermore, they can be held criminally responsible for this deliberate misrepresentation.
As stated, the different types of mortgage frauds and mortgage fraud schemes are most often committed by borrowers. They use various mechanisms and strategies to misrepresent a property in an attempt to gain mortgage financing. From mortgage application fraud to mortgage document fraud, there are dozens of types of mortgage fraud in Canada to be aware of.
Some mortgage fraud schemes are more commonly used than others – ranging from occupancy fraud to straw buying and others.
Straw Buyer. As mentioned, a straw buyer scheme is when a borrower involves a third party – often one with a solid credit history and the necessary funds – to buy a property on their behalf. Should the person behind the straw buyer default, ultimately, it’s the straw buyer themselves who are left responsible and criminally liable for their misrepresentation.
Fraud For Shelter. A borrow may misrepresent themselves to gain access to housing they couldn’t otherwise obtain. This is considered fraud for shelter. This is a crime, making those who provide false information or purposefully omit certain information liable for any and all defaults.
Syndicated Mortgage Fraud. Syndicated mortgages are mortgages where a borrower uses private investors to invest in a property, combining funds to create a single mortgage. Thus, they can start out and remain legitimate. That said, investors often advertise lucrative returns and will inflate the value of a property to acquire and walk away with the investor funds.
There are lots of mortgage fraud schemes that are a little more nuanced. You may find yourself wondering if you are being involved in a mortgage fraud scheme. If someone is trying to falsify information or deprive an owner of any portion of property assets or the title to a property, it may be considered a fraud attempt. Here is what to look for in looking at mortgage fraud in Canada.
Should you do any of these scenarios, you could be considered an accomplice to mortgage fraud. Furthermore, with mortgage fraud examples like these, you very well could be the one who is left financially responsible for a property you cannot afford or criminally liable for the aforementioned fraud.
It is the applicant’s responsibility when applying for a mortgage to verify the information provided is accurate. Consult a mortgage fraud lawyer immediately if you believe you are the subject of mortgage fraud, an accomplice, and have become involved in a mortgage fraud scheme. Here are some general recommendations to help protect yourself from mortgage fraud.
Mortgage fraud is on the rise in Ontario as real estate prices have dramatically increased over the past decade. As someone might decide to inflate their income and be sincere in intending to make mortgage payments, falsifying information on a mortgage application constitutes mortgage fraud. It is ultimately up to borrowers to do their research about fraud and avoid making a categorically untrue claim. Should a borrower be found to be committing mortgage fraud, a lender will provide this information to the authorities.
How mortgage fraud is detected is through fraud management algorithms and networks that monitor customer documents. In many cases, mortgage fraud is detected when a borrower fails to make a payment and violates their mortgage. However, as mortgage fraud continues to rise, particularly amongst high-income cities such as Toronto, lenders are capitalizing on more advanced algorithms and other mortgage fraud prevention tools to help identify fraudulent information.
The penalty for lying on a mortgage application varies depending on the nature of the fraud and the severity of the consequences. In almost all cases, the borrower providing the false information is liable for any financial losses stemming from a mortgage default. In addition, they can be held criminally responsible, being charged with fraud, forgery, uttering forged documents, and procession of property obtained by crime. If you have provided fake documents for a mortgage or are convicted of fraud, sentencing can be fairly severe with up to 10 years of imprisonment.
Reporting mortgage fraud in Canada is fairly straightforward. If you suspect that you have been a victim of mortgage fraud or are aware of potential mortgage fraud being committed, contact a local Ontario police department or the Canadian Anti-Fraud Centre. This is where to report mortgage fraud. Without delay, you will also want to contact a mortgage fraud lawyer. They can provide insight on how to handle mortgage fraud and fraud reporting in Ontario, protecting your rights and ensuring that any damage to your reputation is minimized. This applies to those subject to mortgage fraud, those who have witnessed it, and those accused of mortgage fraud. If you have been charged with mortgage fraud, contact an experienced lawyer today.
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