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.
Issue link: http://digital.canadawide.com/i/254794
MortgageBroker mbabc.ca winter 2014 | 21 fraudawareness Mortgage Fraud Exposed! IN MAY, 2008 I WAS ASKED to represent the vendor of a Vancouver home. e person claiming to be the vendor was an imposter, part of a criminal plan to carry out mortgage fraud. Fortunately, I smelled a rat. He signed the necessary documents before me and a Vancouver police officer, posing as my student. He was arrested as he le my office and in 2013 he was sentenced to two years in jail. It turned out the fraudulent transaction was one of six carried out, or attempted, by the same gang around the same time. e imposter in my office was not the organizer of the frauds, just a necessary player. e gang had also recruited "straw buyers" – people set up to be the buyers and mortgage borrowers. e real homeowners had no knowledge of the schemes. e mortgage lenders had dealt with the straw buyers and had agreed to give them mortgages to fund the purchases. ose transactions reflect one kind of mortgage fraud – fraud for profit. e gang members involved have no intention of occupying the properties. ose transactions could be described as bank robberies. e criminals are aer the mortgage proceeds, not the home – aer all, you can't take the house to Costa Rica. e funds flow from the lender, through the notary or lawyer to the "buyer," then ultimately to the imposter in the form of the proceeds of the sale. e imposter is typically paid a relatively small fee for his or her role and for turning the sale proceeds over to the organizing minds. e typically naïve straw buyer also gets paid for lending his or her name to the purchase documents and mortgage application. It does not end well for them; they quickly discover they have taken on actual responsibility for the mortgage loan. e criminals do not make mortgage payments so the loan quickly goes into default. is type of fraud is quite rare in British Columbia because it requires considerable sophistication involving knowledge of mortgage-lending practices and conveyancing procedures; imposters and straw buyers need to be recruited and managed; and the transaction needs to be carried out under the scrutiny of the various professionals involved, in the hope no one will notice problems with the deal and that the true owner will not become aware of the plan. In my case, aer discussing my suspicions about the deal with my partner, I looked up the phone number of the actual owner of the home. He quickly confirmed he was not selling the property. Aer discussions with the owner, Land Title officials, and the police, it was decided to proceed with the "sting" that resulted in the arrest and conviction. Fortunately, the Torrens land title system here in B.C. provides substantial protection for innocent property owners. In the series of frauds I have described, some transactions For everyone involved in real estate-lending transactions, verification of information is critical BY RON USHER Smell a rat: To perceive some underhand work or treachery afoot; to detect something suspicious (Brewers Dictionary of Phrase and Fable). The allusion is to a cat that smells a rat, but cannot see it. p20-23_Mortgage Fraud.indd 21 14-01-27 11:41 AM