Steering Clear of Mortgage Fraud

Borrowers are educated about to avoid mortgage fraud

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Knowledge is Power: Protect Yourself from Mortgage Fraud

Part one of this series, Steering Clear of Mortgage Fraud: What It Is and How to Avoid It, outlined some common types of mortgage fraud and how to steer clear of fraudulent activities. However, it is still possible to unknowingly become a victim. For their safety, borrowers should be able to identify the signs of mortgage fraud to protect themselves, know what to expect of their broker, and how to report suspected fraud to the authorities.

How to Spot Mortgage Fraud

The following are 9 potential red flags to watch out for:

  1. Lying or allowing misrepresentations on your mortgage application about income, work status or any other information.
  2. Signing a blank mortgage application or being asked to leave signature lines or other important areas on a loan application blank. A broker should never ask you to make any type of false statement on a mortgage application.
  3. Being offered (as a borrower) an interest rate or mortgage amount that’s too good to be true, particularly if the borrower has already been turned down by other lenders.
  4. Handing over large amounts of cash during the home buying process can be suspect — always ask for receipts.
  5. Being offered money for someone else to use your name and credit information to obtain a mortgage.
  6. Not receiving a formal commitment letter outlining the terms and conditions of the mortgage.
  7. Not receiving copies of all documents during the application process when requested. Retain ALL copies of documents and review other copies of documents to ensure facts and figures match up.
  8. Getting monetary kickbacks to go with a specific mortgage lender.
  9. Being discouraged by a seller or real estate broker from seeing or inspecting the property you are buying.

Brokers’ Responsibilities to Prevent Mortgage Fraud

Mortgage brokers can play a proactive role in detecting mortgage fraud. A broker:

  1. Is prohibited from giving false/deceptive information.
  2. Must take reasonable steps to verify the identity of the borrower or lender/investor.
  3. Must ensure that public materials do not contain false or misleading information.

For more information on broker responsibility and anti-fraud resources, visit the Mortgage Broker Regulator’s Council of Canada website:

https://www.mbrcc.ca/Anti-FraudResourcesforIndustry

Report Suspected Mortgage Fraud

If you suspect you might be a victim or target of a scam or mortgage fraud or you are aware of a broker who is committing mortgage fraud, report it.

Winnipeg Police Service: 204-986-6246

Crime Stoppers: 1-800-222-TIPS

Canadian Anti‑Fraud Centre: 1-888-495-8501

The Manitoba Securities Commission:
204-945-2548 or Toll Free in Manitoba: 1-800-655-5244
http://www.mbsecurities.ca/complaints-guidance/file-a-complaint/index.html