Vilkhov Law has a dedicated team of mortgage fraud lawyers representing victims of mortgage fraud in Toronto. Our team of experts helps to identify, report and prevent mortgage fraud.
Our lawyers have years of experience in dealing with fraud cases in Toronto and are ready to help those who were harmed through fraudulent actions as well as those falsely accused of mortgage fraud in Canada.
What is Mortgage Fraud
Although most often, the victims of mortgage fraud are the lenders who provided the mortgage, they can also include buyers defrauded by unscrupulous mortgage brokers and creditors.
Examples of Mortgage Fraud
Most often, mortgage fraud is committed by the borrowers through misrepresentation in an attempt to obtain mortgage financing, which they wouldn’t have received if the information was accurate.
The examples of mortgage fraud in Canada are numerous and include various types of misrepresentation. In an attempt to secure mortgage financing, borrowers may use any of the following tactics:
- declare themselves as full-time employees while working part-time or being self-employed,
- misstating the income, job position, or the period of employment,
- misrepresenting themselves as property owners,
- claiming the property is owner-occupied while purchasing it for rental purposes,
- misrepresenting the source or the amount of the down payment,
- inflating the value of property to secure a higher mortgage,
- omitting existing debt obligations or mortgage(s) in the new mortgage application,
- adding co-mortgagees on the application who have no intention to take responsibility for the mortgage,
- acting as a ‘straw buyer.’
However, these are not the only possible scenarios, as mortgage fraud can also include consumer frauds committed by lenders targeting real estate investors, homeowners facing bankruptcy, and other individuals in need of financing. The most common examples of consumer mortgage fraud in Canada include:
- mortgage modification scams,
- foreclosure rescue
Most Popular Schemes of Mortgage Fraud
Fraud for shelter. In many cases, borrowers may make false statements or misrepresent themselves to obtain a mortgage to get access to housing they cannot obtain otherwise for financial reasons. Such cases fall under the definition of ‘fraud for shelter.’ Although consumers may think that it is not a serious offence, fraud for shelter is a crime making those who provide false information or omit to provide information or otherwise misrepresent themselves liable for any defaults.
Straw buyer scheme. Another type of mortgage fraud in Canada, known as a ‘straw buyer scheme,’ is committed when a borrower involves third parties with good credit history and available funds to act as a buyer of the property in return for monetary remuneration. When the actual borrower defaults on the mortgage, the ‘straw buyer will be responsible for the consequences and can be criminally responsible for misrepresentation as well as for the entire debt even after the property is sold.
Syndicated mortgage fraud. Syndicated mortgages can start as a legitimate operation when a borrower attracts private investors to invest in a property and combines their funds to create a single mortgage. In many cases, investors are offered lucrative rates of return while their investments are backed by the underlying value of the property. Meanwhile, fraudsters often inflate the value of the property and use this scheme to walk away with investors’ funds.
Signs of Mortgage Fraud
Mortgage fraud is not always easy to spot as fraudsters deliberately falsify information to get mortgage financing or deprive the owners of their assets or title to the property. You might be witnessing fraud or an attempt of fraud if you are:
- encouraged to provide false information on the mortgage application,
- encouraged to apply for a mortgage that is higher than the property value,
- discouraged from personally visiting the property or having it inspected,
- offered a fee for the use of personal and credit information,
- contacted by someone you don’t know to help with mortgage issues,
- offered to sign a blank or incomplete application,
- not receiving regular notices from your lender, tax authority or bills from the utility company.
How to Prevent Mortgage Fraud
Those who suspect that they became the subject of fraud should immediately consult an experienced mortgage fraud attorney. It is essential to read all financial documents and/or have the lawyer review them before signing.
When applying for a mortgage, it is the responsibility of the applicant to provide true and accurate information. It must be remembered that providing false or misleading information on a mortgage application constitutes fraud and is a criminal offence.
It is also essential to watch out for any signs of fraud and avoid taking any action that might make you the subject of fraud or liable for fraud. Those witnessing the signs of fraud as listed above should consult their lawyer without delay.
Mortgage Fraud Cases in Canada
With the prices for real estate on the rise, the number of mortgage fraud cases in Toronto and Ontario has been increasingly growing. The surveys run by credit scores agencies demonstrate that many Canadians confirmed that they would lie about their income on mortgage applications.
While many of those who would inflate their income to obtain mortgage financing to buy housing may sincerely intend to make mortgage payments, lying on a credit application or making other false representations constitutes mortgage fraud.
During the last years, Ontario has also faced numerous cases of consumer fraud by brokers targeting hundreds of unsuspecting individuals. One of the last cases was initiated by the Victims of Syndicated Mortgage Investments (VOSMI) collective, whose members lost millions as a result of syndicated mortgage fraud. Often, fraudsters target senior citizens who are susceptible to elder abuse and should be particularly cautious when conducting financial operations.
Penalty for Mortgage Fraud
The penalties for mortgage fraud depend on the type of fraud as well as on the severity of consequences. Those borrowers who provide false information to secure mortgages will be liable for financial losses in case of default and may be held criminally responsible. In a general case, the liabilities will include financial penalties imposed by civil action and criminal charges.
Criminal charges may include fraud, forgery, uttering forged documents, and procession of property obtained by crime in applicable cases. All of the criminal charges related to fraud are very serious and presume up to 10 years of imprisonment or even 14 years for serious fraud cases.
How to Report Mortgage Fraud in Ontario
Those who suspect that they face mortgage fraud should contact Canadian Anti-Fraud Centre and/or their local police department in Ontario.
When to Call a Mortgage Fraud Lawyer
Those who were subjected to fraud, suspect witnessing a fraud case, or notice any signs of mortgage fraud as described above, should contact experienced mortgage fraud lawyers without delay. It is also always advisable to consult with a lawyer before entering into any serious financial transactions or signing any financial document.
If you have been charged with fraud, please contact our criminal defence team.