Canadians, in general, are usually easily content and have a tendency to just go with the status quo. The good thing is that this way has served us good during various economic issues such as the financial crisis of 2008. Unfortunately, mortgage fraud has risen up so drastically in the past few years, reaching 52%, that complacency with the current situation just isn’t enough.
The Dirt on Mortgage Fraud
It is no secret that the mortgage application and approval process in Canada has become a lot trickier in recent years with the introduction of policy changes and various regulations meant to give better protection to prospective homebuyers.
With the above changes, things have increasingly become complicated for borrowers and brokers when it comes to getting a home equity loan but interestingly, the susceptibility to mortgage fraud has undergone nearly no change.
The unpleasant truth is that the way a mortgage is designed in Canada makes it easy for fraudsters to cheat the system, which means in addition to a mortgage, you'll also need a criminal defence lawyer. For instance, the borrower process is too heavily reliant on information and documents provided by the borrower, making it an easy point of entry for the fraudster. Why are things this way instead of lenders getting the information straight from respective sources is a big question. An easy fix will be to change the process and require information to come only for specific sources.
Available Technology Needs Harnessing
Canada is lagging behind the United States and the United Kingdom about having information come from specific sources only but the technology to make things harder for fraudsters does exist in Canada. Finicity, Flinks, and others are third-party applications that make it possible to get important information on funds, payments, and income directly from a consumer’s bank account data. This technology is not yet available to the mortgage industry but it shouldn’t be difficult to make it happen.
The CMHC initiated a similar preventive measure for Canada Revenue Agency so now they have a direct role in verifying income. This data will provide direct access to the borrower’s Notice of Assessment if the borrower consents.
There is little to no progress to this actually happening despite Canadians supporting the move for an improved process. The CRA definitely needs to have a formal program to access data and the CMHC needs to help guide this process.
Combating Mortgage Fraud
It is for the interest of everyone, lenders, borrowers, and mortgage professionals to champion against mortgage fraud. Industry regulators just don’t have enough resources to fight against it on their own. What is best is if an amendment could be made to the overall lending process. This amendment will make it easier for lenders to keep lending with less interference and risks.
Are you a lender who is worried about a possible fraudulent data from a borrower? Let us at Haywood Hunt, verify information for you! Our private investigation services can dig for information as well as alert you for inconsistencies that may spell disaster for you. Contact us today for details.