Mortgage fraud is the deliberate misrepresentation of information to obtain mortgage financing that would not have been granted if the truth had been known.

Mortgage fraud includes:

  • misstating your work position, your income or the length of time you’ve held your job
  • stating you’re a full-time salaried employee if you are not
  • misrepresenting the amount or source of your down payment
  • claiming a rented property is owner-occupied
  • not disclosing other mortgages or debts
  • omitting information to inflate the value of the property
  • adding purchasers’ names on the mortgage application who will do not intend to take responsibility for the mortgage
  • acting as or using a “straw buyer” – a person whose good credit is used to get a mortgage for someone else

Borrowers who misrepresent information and straw buyers who allow a property to be purchased in their name are committing mortgage fraud and will be liable for any financial shortfall in the event of default. They may also be held criminally responsible for their misrepresentation.

Protect yourself

Never deliberately misrepresent information when applying for a mortgage. In addition:

  • Don’t add your name to another person’s mortgage unless you plan to make payments on it.
  • Don’t sign papers until you understand them. If necessary, seek legal advice or have them translated.
  • If you make a deposit on a home, don’t give it directly to the seller. Make sure it is held “in trust” by the seller’s realty company or a lawyer / notary.
  • Before you buy a property, get its sales history through the land titles office or consider having it inspected and appraised. Check with a lawyer to see if anyone other than the seller has a financial interest in it or if there are any outstanding liens or tax arrears.
  • Always know who you are doing business with. Deal with licensed or accredited mortgage and real estate professionals.
  • Get independent advice from a lawyer / notary. Talk to them about title insurance or alternative methods of protection.

Be wary of anyone who approaches you with an offer to make “easy money” in real estate. If a deal sounds too good to be true, it probably is.

Report fraud

If you suspect that you’ve been the victim of mortgage fraud, contact your local police department. Or contact the Canadian Anti-Fraud Centre.

Toll-free phone: 1-888-495-8501

Date Published: March 31, 2018