What lending volumes increase, fraud rates increase. We have seen that time and time again here in the US.
And now, Canada’s mortgage boom is leading to a boom of another type – mortgage fraud.
According to Equifax, who analyzes fraud trends in Canada, reported this week a massive increase of mortgage fraud of 52% since 2013. The rapid increase in mortgage fraud in Canada was driven by two factors
- Falsified Account Statements where borrowers lie about their income and employment
- Falsified Documents where borrowers provide false documentation to back up their fraud claims.
Not surprisingly, we have seen the same trend in mortgage lending here in the US where about 80% of mortgage application fraud contains some element of income or employment misrepresentation by borrowers.
Results of Survey Points to The Fact That Borrowers Consider White Lies Ok
I wrote a piece several months ago that pointed out 1in 4 mortages in Australia are considered Liar Loans and borrower’s felt it was ok to lie about their income.
Equifax had conducted their own surveys in Canada now and found that there is a similar phenomenon there regarding white lies albeit not to the extent found in Australia
- 13% of Canadians indicated they felt it was okay to tell ‘a little white lie’ when applying for a mortgage to get the house they want.
- 16% said they believe mortgage fraud is a victimless crime
- 8% admitted to misrepresenting the facts on a credit or loan application
So instead of 1 in 4 mortgages being liar loans as found in Australia, the fraud rate is only 1 in 10 in Canada.
That is still bad. But it seems it is a global phenomenon and one that we see here in the US as well.
Interesting story coming out of Canada this week.
Special Thanks to tipster and global fraud fighter Maryann Miller for providing me this breaking fraud news out of Canada