Fraud-proof Your Success: Red flags to watch for in today's market

March marks Fraud Prevention Month, and this year’s theme is “20 years of fighting fraud: from then to now.” This theme aims to help Canadians recognize how fraud has evolved over the years, from telemarketing and mail to social media and artificial intelligence.   
 
In 2023, the top three most reported types of fraud were identity fraud, service fraud, and phishing, with the highest level of financial impact being investment scams - including mortgages.   
 
As a mortgage professional, it's crucial to recognize the various forms of mortgage fraud in the industry. From housing fraud to title fraud, profit-driven schemes to foreclosure scams, each presents a significant threat to the integrity of the industry. Being aware of potential red flags is vital to protecting both your reputation and the financial well-being of your clients. 
 
Common red flags to watch for: 

• An individual proposes compensation in exchange for permission to use your identity and credit details to secure a mortgage. 
• ​You're advised to fabricate details on a loan application. 
• You're requested to leave crucial sections, like signature lines, blank on a loan application. 
  
• The mortgage's sum surpasses the property's assessed value by a significant margin. 
  
• The mortgage has undergone multiple refinances, each time escalating the loan amount. 
  
• A seller or financial advisor dissuades you from inspecting the property you intend to purchase. 

By remaining vigilant and following ethical standards, we can combat mortgage fraud and uphold the integrity of the industry. Remember, the consequences of involvement in fraudulent transactions far outweigh any potential gains. 
The government of Canada has released three regulations amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), one including the mortgage sector. As of October 2024, business and professionals involved in the mortgage sector, specifically mortgage administrators, brokers and lenders, will have obligations to report suspicious activity to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).   

AMBA has two informative webinars tailored to the mortgage industry on PCMLTFA and FINTRAC, both available in the member portal for viewing. If you have any questions about the webinars, please reach out to [email protected].  

Protect yourself. Stay Informed.   
#FPM2024