42 | WINTER 2015 mbabc.ca MortgageBroker
Regardless of the sophistication of the scam, a mortgage broker needs to heed red flags
Fraud Alert
By ray basi Director of Policy anD eDucation
MoRTgagE fRaud is not uncommon.
e scam may be as simple as a person
impersonating someone close to him or her by
having considerable matching identification
information (e.g., John Smith Jr. impersonates
John Smith Sr., an impersonator finds a
homeowner with the same or similar name, or
an impersonator obtains forged identification).
Or the scam may be far more elaborate,
involving a straw buyer being paid a fee
for the use of his or her identification and
clean credit; the straw buyer signs the
documentation for the fee and, perhaps
unwittingly, takes on liabilities. e property
value may be inflated (e.g., by an illegitimate
appraisal or a series of property flips with
unjustified increases in price) and a mortgage
obtained based on the inflated value. e
fraudster pockets any excess funds, the
payments are not made, the property is sold
in foreclosure (perhaps to an associate of the
