Some notable quotes:
The mortgage industry in Canada has undergone dramatic changes over the last several years.So just what exactly is mortgage fraud? While it includes the obvious fraudulently obtained mortgages had through identity theft, it also includes many other less, how shall we say this?, socially frowned upon actions:
As more lenders and mortgage products come on the market, competition for business increases, resulting in increased approval rates and reduced application processing time... [creating] more opportunities for various types of real estate fraud involving titles and mortgages.
The average case of real estate fraud in Canada is now about $300,000.
In 2005, real estate title fraud claims accounted for 33 per cent of the total dollars paid in claims at title insurance company, First Canadian Title, up from six per cent in 2000.
In a five year period (roughly equal to the current bull market in RE) one Canadian insurance company has experienced over 500% jump in fraud-related claims. Wow. And this for a problem that no one wants to talk about, according to CTV:
Mortgage fraud is the material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or issue a mortgage loan.
Mortgage fraud occurs in a broad range of activities related to property, employment, identification, equity and title. These include such activities as inflating or deflating appraisals and valuations of property, misrepresentation of property characteristics such as forged or altered MLS (Multiple Listing Service) listings, and misrepresenting commercial property as residential or the number of units in the property.
Fraud can also be perpetrated through false information provided on loan applications and employment and financial statements, and by falsified or misrepresented down payments, by taking loaned money and using it for different purposes, withdrawing money before closing, the fraudulent transfer of title and mortgage disclosure, and when a property is not held in the name of the seller. (emphasis mine)
It's a crime-wave sweeping the country, and it's a problem no one wants to talk about – not the banks, not the government, not even the victims.So who's looking out for who regarding this? Seems like the banks are starting to look out for themselves: Ms. HHV informs me that more than ever, her bank is requiring appraisals on mortgages in this town. Of course, that could mean they don't have the same confidence in a continued rising market here anymore.
More mortgage fraud info can be found here.
Worst case scenario: