CmB magazine cmba-achc.ca spring 2017 | 9
securities issuers who need to provide investors
with disclosure of solid investor information,
we also need common sense to prevail.
Regulatory responses should be proportional
to the actual harm sustained by the public, and
should not exacerbate or cause further harm to
sound businesses and their investors.
In addition, the government should take
a more holistic approach to protecting the
public. It can do more to prevent mortgage
fraud and should do more. But far too oen
government departments and regulators have
such a narrow focus on their own minute piece
of the pie, they fail in their obligation to serve
the greater public good.
As an example, the Canada Revenue
Agency does nothing to counter problems
with mortgage fraud. e CMBA wrote to
the Minister of National Revenue, Minister
Lebouthiller, in June of 2016 to advise her of
the increased risk of mortgage fraud resulting
from the new format of their Notices of
Assessments (NOAs). e new form has been
overly simplified, and many of the features of
the NOA which make them harder to replicate
or manipulate have foolishly been removed.
CRA, with its exclusive focus on collecting
taxes, did not see that this can make them an
easily deployed tool for the perpetration of
mortgage fraud. We spoke personally with
Ministerial staff to tell them that their 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.
We further explained that fraudsters will
oen alter or create NOAs in order to qualify
borrowers for mortgages for which they would
otherwise not be approved. Ministerial staff
appeared concerned and promised to review
and rectify these issues. But to date, nothing
has been done to correct the deficiencies with
the NOAs.
For government regulators to take such a
hard stand against industry, when the inaction
of the government itself is a far bigger culprit
in this problem, is nothing short of shameful.
Add to this, that CRA could easily deploy
tools to almost completely eliminate mortgage
application fraud by permitting third party
document providers to supply mortgage brokers
and lenders with NOAs. is ensures that
the NOAs have not been tampered with by
fraudulent borrowers. However, CRA recently
put a stop to the practice of document providers
retrieving borrower NOAs and other tax
documents for mortgage qualification purposes,
as this was not what they considered to be a
proper purpose of the document retrieval.
We need to ask whether politicians,
government and media really understand the
mortgage industry. Fortunately, we know that
mortgage lenders and the mortgage broker
industry are strong enough to withstand the
media hysteria and failings of a willfully blind
government.
1 http://business.financialpost.com/fp-comment/jack-mintz-how-
hysteria-around-home-capital-ginned-up-a-fictional-financial-crisis
