Mortgage Broker

Summer 2019

Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.

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Page 29 of 47

legalease n his co-worker would receive $2,000 for the referral. Agreeing to participate, Pang was contacted by the mortgage broker by telephone. She advised she would run a credit check to see if he qualified for a mortgage. He provided her with his social insurance number and, through his co- worker, T4 slips. e broker then arranged a mortgage and gave Pang details of the purchase and the mortgage. e seller was the broker's mother. e broker told Pang to meet with her husband's brother, who took him into an office with a bank employee and told him to sign some documents. BACKGROUND Mortgage brokers who commit mortgage application fraud risk regulatory action and criminal prosecution. As the Alberta Court of Queen's Bench in Scotia Mortgage Corporation v Pang, 2019 ABQB 312 illustrates, they also risk having to pay significant civil damages. ISSUE A "straw purchaser" knowingly participated in mortgage application fraud and was successfully sued by the lender. Does his involvement in the fraud prevent him from recovering damages from others, including from the mortgage broker? WHAT HAPPENED? A co-worker introduced the nominal purchaser, a Mr. Pang, to a mortgage fraud scheme. Pang's understanding was that he would be helping buyers who did not have the required credit rating to obtain a mortgage, be helping his co-worker who was financially stressed and make some money for himself. He understood: n he would take title to a property and be the borrower, but that he would be taken off title three months aer the purchase; n he would be repaid the three months of mortgage payments that he would have to make, and receive an additional $3,000; and SWIMMING WITH SHARKS Accomplice to mortgage application fraud can sue broker BY RAY BASI, LL.B., STAFF EDUCATION AND POLICY REVIEW 30 | summer 2019 CMB MAGAZINE

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