What is Mortgage Fraud?

Mortgage Fraud occurs when someone deliberately misrepresents information to obtain mortgage financing that would not have been granted if the truth had been known.

Examples of Mortgage Fraud 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?

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.
  • 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.
Source: CMHC