Mortgage Broker

CMB MAGAZINE cmba-achc.ca summer 2016 | 35 cranoa Minister of National Revenue, the Honourable Diane Lebouthillier, recently announced that her office had made "improvements to the way the Canada Revenue Agency [CRA] communicates with millions of Canadians," and that in making these changes she drew on "international best practices to make sure … improvements truly … deliver the best possible results." e CRA conducted extensive testing with user-based groups to ensure that new tax documents are more easily understood by the reader. e improvements are intended to make the CRA more "client- focused" and helpful to Canadians. Last year, the CRA issued 28.9 million Notices of Assessment (NOAs). One of the improvements undertaken by the CRA was to create a new form of NOA that is less cluttered and clearer to the public – more specifically, the individual taxpayers who receive them. e new-format NOA clearly achieves this goal; it is, indeed, simpler and easier to read. Some of the changes to the NOA include: n a complete redesign of page content. e name and social insurance number of the taxpayer appears on page one, and most of the numbers related to the tax filing and income amounts are on page two n the blue shaded paper which gradually fades to white is no longer being used n the font of the new NOA is Helvetica, which is simple and clean However, the new NOA has a problem – a serious one. e problem may not be apparent to a client-focused test group, but it is abundantly clear to mortgage brokers and lenders. e form appears to have been overly simplified, in that many of the features that made it harder to replicate or manipulate have been removed. us, it is an easily deployed tool for the purpose of mortgage fraud. NOAs are used to verify employment income in the mortgage application process by both lenders and mortgage-default insurers, including the Canada Mortgage and Housing Corporation (CMHC). Fraudsters will oen alter or create forged NOAs in order to qualify borrowers for mortgages for which they would otherwise not be approved. We know that mortgage fraud is a significant concern for the Canadian public, the mortgage industry, regulators, financial institutions, private lenders, government and a host of others. e losses associated with mortgage fraud are unknown, but many estimate that losses run into the many billions of dollars and are a key means for money laundering. It is in the interests of the Canadian mortgage broker industry, mortgage lenders and insurers to ensure that systems are designed as robustly as possible to combat mortgage fraud. Accordingly, the Canadian Mortgage Brokers Association made recommendations to Minister Lebouthillier to address these concerns. In particular, we explained that it would be relatively easy for a fraudster to include the identifying information of a borrower on page one, while page two's information would belong to a separate person with higher income; the mixed pages would be presented as a single NOA belonging to the borrower. We recommended to Minister Lebouthillier that page two of the new form be amended to contain identifying information relating to the taxpayer, such as their name and social insurance number. We also pointed out that the blue shaded paper which gradually fades to white was an important security feature of the old NOA, as it was difficult for fraudsters to replicate. We recommended that this security feature be added back into the NOA or that additional security features be adopted in its place. In addition, the Helvetica font used in the new NOA is readily accessible by the public and is widely used. e font of previous NOA forms was much rarer and less accessible, making it a challenge for fraudsters to replicate. erefore, we also recommended that the NOA be written in a font that is not easily accessed by members of the public. e CMBA has received a quick reply from Minister Lebouthilier's office; it promises to address the concerns. e Canada Revenue Agency's changes to the Notice of Assessment have created a fraud risk BY SAMANTHA GALE, CMBA EXECUTIVE DIRECTOR Assessment Reassessing the with user-based groups to ensure that new tax documents are more easily understood lenders. e form appears to have been overly mortgage broker industry, mortgage lenders and insurers to ensure that systems are designed as robustly as possible to combat mortgage fraud. Accordingly, the Canadian Mortgage Brokers Association made recommendations to Minister Lebouthillier to address these concerns. be relatively easy for a fraudster to include the identifying information of a borrower on page one, while page two's information would belong to a separate person with higher income; the mixed pages would be presented as a single NOA belonging to the borrower. We recommended to Minister Lebouthillier that page two of the new form be amended to contain identifying information relating to the taxpayer, such as their name and social

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