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The Deceivers Among Us

Ten percent of our fellow citizens say it’s okay to inflate income when applying for a mortgage. Nine percent say they’ve already lied on one or more credit applications.

And that’s just the percentage that admit it.

These discouraging figures were released by Equifax Canada this week. Equifax’s Tim Ashby, VP of Personal Solutions, says, “Make no mistake, lying on your loan application is a type of mortgage fraud.”

The problem is, the cheaters in question don’t think that mortgage fraud is a serious crime, and/or they don’t think they’ll get caught.

But shady applicants beware. Lenders are in the business of rooting you out.

Do they nab all of the shortcut takers? Far from it, but they get enough to make attempting fraud a bad gamble.

Sadly, lenders don’t report “soft fraud” to the police often enough. Nor do police prioritize it sufficiently. (“Soft fraud” is a euphemism that describes misrepresenting information to obtain a mortgage on your property.)

When they default, falsifiers raise the cost of borrowing for everyone. Lenders pass along their losses to you and me. The perpetrators themselves lose their properties, are subject to owing shortfalls to lenders/insurers and leave themselves open to criminal charges.

The main weapons battling soft fraud are technology and a lender’s own expertise. And both are getting better.

In today’s age we have information sharing among financial institutions and mortgage default insurers. In fact, most borrowers don’t realize that perpetrating application fraud could get you red flagged at other lenders, seriously affecting your chances of getting an economical mortgage.

That assumes you’re caught, of course — but that is more probable today than ever.

Rob McLister, CMT (email)