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Mortgage Fraud in Canada – CBC Marketplace Tells (Almost) All

Fraudsters cash in, and immigrants are one of the targets. Here are our thoughts on the CBC Marketplace findings.
CBC Marketplace Mortgage Fraud

Jane Pinzhoffer

Mortgage Fraud in Ontario

A recent episode of CBC’s Marketplace went undercover to reveal a more than concerning number of fraudulent mortgages in real estate markets in Ontario and across Canada.

In many cases, it’s a network of people that includes real estate agents, mortgage brokers, and bank employees facilitating mortgage fraud for their own financial gains.

In the episode, hidden cameras recorded secret shoppers posing as homebuyers targeting agents, which after research, were considered a risk for fraudulent activity. They found fake documents, such as bogus job letters, credit reports, and tax filings, created to allow buyers who would otherwise not qualify to obtain loans. Of course, these fake documents cost thousands of dollars.

Mortgage Fraudsters Target Immigrants

Unsurprisingly, new Canadians are often the target for these schemes because they have limited job and credit history and are unfamiliar with the home-buying process in Canada.

It’s not hard to see how vulnerable someone who doesn’t know how the system works is an easy mark in these scenarios. If you’ve ever looked at buying property in another country, you probably experienced first-hand that things are set up differently from what you were accustomed to.

In one case, the agent told the buyers not to get pre-approved, something no ethical agent would ever do.

One story revealed a new immigrant couple who paid a Scotiabank employee $5,000, thinking it was legitimate. They got their mortgage, and later when they were at the bank on an unrelated matter, they discovered their file stating they worked at jobs they never had. Fortunately, after a long process, the culprits were caught and the couple were refunded their money.

Of the 25 agents in five hot markets across Canada that were cold-called by Marketplace and asked to forge documents, one in five said yes, if often in coded language… twenty-percent!

Go to 15:50 to listen to Ariel’s experience with a shady realtor who was forthright in discussing getting forged documents.

Unethical Real Estate Agents

There are other ways for unscrupulous real estate agents to take advantage of unsuspecting buyers in order to line their own pockets, especially if the buyer is an immigrant oblivious to the homebuying process.

The realtor could take a potential buyer to see a $1,000,000 home and tell them that it’s underpriced and they should put an extra $50,000 down if they want the house. They may only show the buyer their listings or the ones where they can get a larger commission, essentially whatever benefits them the most. They could also fabricate administrative fees of $10,000 or $15,000 that go straight into their pocket –this was usually a combined effort between a mortgage broker and real estate agent.

Fraud Isn’t Exclusive to Real Estate

While the real estate industry has had one of the highest increases in reported fraud cases over the last few years, it’s by no means the only industry where a lot of deception goes on.

Take the collectibles market as an example. From sports memorabilia and comic books to toys and Pez dispensers, people collect anything and everything. But there are estimates that fake collectibles generate billions of dollars yearly for virtually worthless stuff.

The point is there are devious and dishonest people in every industry.

Members of the Toronto Regional Real Estate Board (TRREB) have publicly denounced the behaviour of unethical realtors and have called on the Real Estate Council of Ontario (RECO) for public disclosure of the names of those individuals identified by the CBC Marketplace investigation.

Currently, real estate agents caught falsifying mortgage information can be fined up to $50,000, spend up to two years in prison, and have their agent’s license revoked. Is punishment enough to stop these unsavoury practices?

Click here to watch the CBC Marketplace episode.

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