Mortgage Fraud FAQs
Are there different types of mortgage fraud?
- Yes, there are a few different kinds of mortgage fraud. The main types to be aware of are fraud for housing, fraud for title, fraud for profit, and foreclosure fraud. For details on the different kinds of fraud, see Avoiding Mortgage Fraud: What Consumers Need to Know.
What is fraud for housing?
- Fraud for housing is providing misleading or false information on a loan application (usually by misrepresenting income or other debts) to qualify for a mortgage loan you would not otherwise get and/ or representing on the loan application you are going to live in the home, when in fact, you have no intention to live in the home.
What is fraud for profit?
- Fraud for profit is fraud where the motive is financial gain. This usually includes a number of individuals working together to inflate the price of a home or get loans for non-existent homes. Organized crime is often the mastermind of these fraud schemes. Industry insiders are normally involved, and the fraud is more complex. For an example of a typical Straw Buyer mortgage fraud for profit, click here.
How can I protect myself from mortgage fraud?
- Review RECA’s Mortgage Fraud: Protect Yourself
- Watch out for people who make you an offer that seems too good to be true.
- Read any contracts you sign very closely. When in doubt, have your lawyer review documents and contracts if something doesn’t seem right to you.
- Check your land title every so often to ensure there is nothing suspicious showing up on title (second mortgage, etc.).
- Check your credit through Equifax or Transunion every couple of years to make sure you haven’t been the victim of identity theft.
Some mortgage fraud is more serious than others, right?
- That’s not really true. Fraud is fraud. Just because it was for housing rather than for profit does not make it any less serious. The fact is, it’s a fraudulent action. Law enforcement bodies and other regulators take fraud seriously.
What should I do if I suspect a suspicious real estate or mortgage transaction?
- Your best bet is to speak to a lawyer about your suspicions.
Can individuals who are involved in mortgage fraud be punished by law?
- Yes. Fraud is a Criminal Code of Canada offence.
Where can I go to learn more about how to protect myself from mortgage fraud?
- The Real Estate Council of Alberta is one resource for consumers about mortgage fraud prevention and awareness, but there are others:
- Service Alberta
- The Law Society of Alberta
- Mortgage Professionals Canada
What is a “straw buyer”?
- “Straw buyers” are phony loan applicants. A fraudster usually offers a straw buyer payment in exchange for the use of their name and credit information. Straw buyers may say they did not know their name would be used on a mortgage application, but saying you didn’t know your information would be used to commit mortgage fraud is not a legitimate excuse under the law. Straw buyers may also be used to sign documents containing false information. To learn more about straw buyers, click here.
Am I only at risk for mortgage fraud if I have bad credit?
- No. Mortgage fraud can affect anybody; good or bad credit, employed or unemployed. Some mortgage scam artists try to recruit buyers with good credit who might be attracted to quick, high return investment opportunities.
Can I be compensated if I become the victim or mortgage fraud?
- RECA administers the Real Estate Assurance Fund in Alberta. The Fund compensates consumers who suffer a financial loss as a result of fraud, breach of trust, or a failure to disburse or account for money held in trust by an industry member with respect to a trade in real estate or deal in mortgages. The protection does not extend to clients of unlicensed professionals.
How do I find out if the person I am dealing with is a licensed real estate or mortgage brokerage professional?
- All professionals who are licensed to trade in real estate or deal in mortgages in Alberta can be found through a quick online search at reca.ca. Click on “Searching for an industry professional” and type in the name of an individual or a company.