The credit reporting agency stated that the number of potentially dishonest mortgage applications has grown by 52 per cent over the past 4 years. Many of these flagged applications have originated from Ontario and British Columbia, both of which play host to Canada’s most expensive housing markets.
“It could be investing in the market as a way to cleanse money. It could be: ‘I really want that home and I’m getting into a bidding war and even though I make $60,000, I’m going to say that I make $90, 000,’” Equifax vice-president of customer insight Tara Zecevic stated in the report, as quoted by The Globe and Mail.
Canada’s long-running affordability crisis is largely responsible for kick-starting the trend, she added.
“I definitely think there is this fear of a continuous rise in the cost of homes, that home ownership is starting to become out of reach.”
Banks provided around 90 per cent of the red flags. Most of the deception involved identity theft and money laundering. Many would-be buyers have also been found providing falsified or tampered tax returns, bank statements, and employment documents to qualify for mortgages larger than they are actually entitled to, Zecevic explained.
In a related online survey, Equifax found that 8 per cent of Canadians actually falsified information on their own credit applications. Meanwhile, 13 per cent believed it was okay to tell “little white lies” on their mortgage applications, while 16 per cent considered mortgage fraud a “victimless crime”.
“What ends up happening is consumers think: ‘I’m not really doing anybody any harm,’” Zecevic said.
In its latest study, Equifax Inc. revealed that the incidence of mortgage fraud in Canada has risen along with the runaway prices in the country’s hottest real estate markets.