As housing prices spike mortgage fraud rises, new research says
According to new data from Equifax Canada, there's been a 52 per cent increase in suspected fraudulent mortgage applications since 2013.
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Mortgage fraud is rocketing in Canada, new statistics say, and there may be a link to Toronto’s hot housing market.
A report from credit agency Equifax Canada, released Wednesday, revealed a 52 per cent increase in suspected fraudulent mortgage applications since 2013. Meanwhile, 13 per cent of Canadians felt it was OK to tell a “little white lie” to get the house they want when applying for a mortgage, according to an Equifax survey.
Equifax does not break down the increase by city or provide the number of suspected fraudulent applications since 2013.
Of applications flagged for fraud 67 per cent were from Ontario while the next highest was 12 per cent from B.C.
Tara Zecevic, vice president of customer insight at Equifax Canada, said this includes attempts at fraud and a “pendulum” that can swing from “slightly embellishing” income in a bidding war, to organized crime rings laundering money.
Although it’s hard to say for sure, she said there is potentially a connection between the “uptick” and rising Toronto home prices and people desperate to get into the market at all costs.
“It’s becoming increasingly difficult, there’s a lot of competition you get when you’re looking for a property,” she said.
Zecevic said although it can be seen as a “victimless crime,” embellishing income can also hurt homebuyers in the long run if they overextend their debt.
Mark Cashin, a Toronto-area mortgage broker, said this kind of “fraud for shelter” is “more of a reality than it has ever been.”
“When you give people limited choices and they have to provide a roof over their family’s heads, they’re going to do what they have to do to survive,” he said.
He blames a supply problem, and says the government has only made the problem worse with new mortgage rules that make it harder for people to qualify.
But Murtaza Haider, a professor of real estate economics at Ryerson University, said he does not think the numbers are cause for alarm.
“I think it is pretty much normal for people to embellish their incomes,” he said, adding it’s hard to know without the number of applications suspected of fraud over the last few years how much of an issue it is.