The federal government today confirmed plans to consult with the mortgage industry on developing income verification tools through the Canada Revenue Agency.
The announcement was part the government’s new housing strategy entitled ‘Solving the housing crisis: Canada’s Housing Plan.’
“Independently verifying borrower income helps financial institutions detect and deter the types of fraud or misrepresentation that can increase the costs of mortgages for all borrowers,” the plan reads. “Budget 2024 will propose the government’s intention to consult with the mortgage industry on making a tool available through the Canada Revenue Agency to verify borrower income for mortgages.”
The government is also promising additional funding for the CRA to crack down on real estate fraud.
Reaction has so far been positive from industry members who had been lobbying for such changes as an effective step in reducing mortgage fraud.
In an update to members, Mortgage Professionals Canada said it is “proud that our efforts around the issues and use of digital income verification have yielded this kind of attention from the highest levels of government, and we [are] confident that the collaboration between the CRA and the housing and infrastructure sector stakeholders will ultimately benefit homebuyers.”
In a social media post, mortgage broker Ron Butler called the announcement “great news.”
“We had zero commitment [on this from the federal government] for the last 15 years,” he added. “I will take this as a win.”
In November, Butler and MPC’s director of government affairs, Jasmine Toor, appeared before the House of Commons Standing Committee on Finance advocating for the adoption of a digital income verification tool.
“There is way too much income document fraud in Canada,” Butler said. “It would be very useful and a very simple fix to simply say ‘CRA, we need some linkage to the big banks who have highly secure systems.”
Currently, mortgage applicants must prove their income using documents from the CRA’s My Account service, such as tax assessments or T4 slips, or they have to request physical copies of these documents.
Mortgage fraud in Canada has been a growing problem in recent years, with Equifax reporting fraud cases are up 52% since 2013.
The problem has also become a costly one for lenders, with research finding that every $1 lost to fraud costs Canadian financial services firms over $3.78 to recover.
Ben Rabidoux, an analyst with Edge Realty Analytics, called the income verification announcement “a big deal.”
In a social media post, he said that while some critics may downplay the promise to consult with the mortgage industry, he said they’re missing the broader context.
“Our government just acknowledged that mortgage fraud is a big issue,” he noted. “That seems kind of important.”
Highlights of the government’s housing plan
The release of the federal housing plan comes one day after the government unveiled new measures it says will help address housing affordability for first-time buyers. That included extending the maximum amortization period from 25 years to 30 years for insured mortgages on new builds and increasing the Home Buyers’ Plan limit to $60,000 from $35,000.
Additional measures unveiled today as part of the government’s housing plan include:
- A plan to build 3.87 million new homes by 2031, including 2 million net new homes in addition to the 1.87 million homes that the Canada Mortgage and Housing Corporation forecasts will be built by that year.
- An additional $15 billion allocated to the Apartment Construction Loan Program to ensure the construction of at least 30,000 new rental apartments.
- $10 million invested in the Skilled Trades Awareness and Readiness program to motivate high school students to pursue careers in the skilled trades.
- $50 million directed to the Foreign Credential Recognition Program, specifically to support residential construction and assist skilled trades workers in building more homes.
CRA income verification federal government housing plan housing strategy income verification Jasmine Toor mortgage professionals canada ron butler
Last modified: April 14, 2024
Wow! It’s amazing how no one in the liberal camp could come up with any ideas related to the several announcements they’ve made in recent months. All stolen from the conservatives. Is this how they further their agenda for digital currency?
Hahaha
So much for Carbon tax.. Goverments all over the worl should can CRYPTO…. as crypto produces carbon emissions with ZERO Productivity.. do we even need CRYPTO? thats mafia currency
What if the lender doesn’t apply full payment to mortgage?
Every payment made money is taken off the top with no explanation of what it was applied to?
Fail to acknowledge payments??
And all this will result in soaring interest rates, more expensive homes and higher taxes! Keep government out of private enterprise!
Idiots. The more they get involved the less predictable and functional the private sector becomes. What you don’t see them saying is that they will cut there taxes and balance there own budget to stop inflation and rising ownership costs for everyone. That is what they do control, what they are mismanaging, and what would help. Sure spending some more of my money, printing it out of thin air, and this is going to get you my vote. How stupid really do you think people are?
Mortgage fraud is not the issue here! Housing supply is the issue! I don’t think banks will allow this to happen. They want business, in any possible way. At the end of the day, foreclosures are not a big number in Toronto market now and it hasn’t been in the past decades, which means whatever ways people are getting their mortgages, it’s working. I don’t think this will lead to anywhere! It’s just a news hype.
It’s about time and it’s good to see support from Ron on this topic. All those against lenders having access to validate income directly with CRA need to give their heads a shake – it has no impact on business, unless you have something to hide.