The CMHC wants the Canadian Revenue Agency to provide more robust verification of incomes stated on mortgage applications.
The call comes following an investigation by the CMHC into the correlation between incomes stated on mortgage applications and those reported to the CRA.
It now wants the tax agency to take a “more direct and formal role” in verifying incomes according to documents obtained by Reuters.
Some other countries including the US and UK have systems where the tax agency does provide lenders with verification of mortgage applicants’ incomes and the CMHC believes this would cut potential incidents of mortgage fraud, which can have a serious impact on the economy, especially if there is another financial crisis.
The CRA told Reuters that it is looking into ways that it can respond to CMHC’s concerns and provide lenders with income verification.
While the majority of Canadians are honest on their applications, a recent study by Equifax found that 13% think it’s ok to lie on a mortgage application and 16% believe mortgage fraud to be a “victimless crime”.
The study of mortgages originated between 2013 and 2016 found a 52% spike in suspicious mortgages, mostly in the highest priced housing markets.
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