March is Fraud Awareness Month in Canada, making it the perfect time to shed light on mortgage fraud and how to protect yourself. Whether you’re a first-time homebuyer, a homeowner looking to refinance, or an investor, understanding mortgage fraud is crucial. Scammers are becoming more sophisticated, and recognizing red flags can save you from financial and legal trouble. Here’s what you need to know about mortgage fraud and how to stay safe.
1. What is Mortgage Fraud?
Mortgage fraud occurs when individuals deliberately misrepresent or omit information on a mortgage application to obtain a loan they wouldn’t otherwise qualify for. It can also involve fraudsters tricking homeowners into fraudulent schemes that result in financial loss or property theft.
2. Common Types of Mortgage Fraud in Canada
Understanding the different types of mortgage fraud can help you stay vigilant:
- Title Fraud: A fraudster steals your identity, changes property ownership records, and takes out a mortgage on your home without your knowledge.
- Foreclosure Rescue Scams: Scammers target homeowners struggling with mortgage payments, offering “help” while stealing their property.
- Straw Buyer Schemes: Someone is convinced to apply for a mortgage on behalf of another person, often with fraudulent documentation.
- Fake Employment or Income Schemes: Fraudsters forge employment records or income documents to obtain mortgage approvals they wouldn’t otherwise qualify for.
3. Warning Signs of Mortgage Fraud
Be on high alert for these red flags:
- Offers that seem too good to be true, such as guaranteed approvals regardless of credit history.
- Pressure to sign documents quickly without time to review them properly.
- Requests to leave signature fields blank for someone else to “fill in later.”
- Unlicensed mortgage brokers or individuals claiming they can “fix” mortgage applications.
- Unexpected mortgage or title changes on your property records.
4. How to Protect Yourself from Mortgage Fraud
Being proactive can help safeguard your home and finances:
- Verify your mortgage broker and lender: Always work with licensed professionals by checking their credentials on the Financial Services Regulatory Authority of Ontario (FSRA) website or your provincial equivalent.
- Monitor your credit report: Regularly check your credit report for unauthorized credit applications or loans in your name.
- Be cautious with personal information: Never share sensitive financial details with unknown parties; be wary of phishing attempts.
- Review documents carefully: Always read and understand any mortgage-related documents before signing. If something seems unclear, consult a lawyer.
- Register for title insurance: This can help protect your property from fraud-related title changes or liens placed on your home.
5. Reporting Mortgage Fraud in Canada
If you suspect you have been a victim of mortgage fraud, take immediate action:
- Report the incident to your lender and credit bureau (Equifax and TransUnion) to prevent further damage.
- Contact the Canadian Anti-Fraud Centre and local law enforcement.
- Notify your provincial financial regulatory body, such as FSRA in Ontario or the Financial Consumer Agency of Canada (FCAC).
Final Thoughts: Stay Vigilant This Fraud Awareness Month
Fraud Awareness Month is a timely reminder to stay alert and informed about mortgage scams in Canada. Whether applying for a mortgage, refinancing or simply maintaining your homeownership status, taking the proper precautions can help protect your financial future. If you have doubts about a mortgage deal, seek professional advice before proceeding.
You can protect your home, finances, and personal identity from fraudulent activities by staying educated and cautious.