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 cmba-achc.ca CMB MAGAZINE
