Skip to main content

Protect Yourself Against Mortgage Fraud

Mortgage fraud is a serious issue that can have a devastating impact on unsuspecting buyers who are new to the home buying process. Participating in a scheme that requires you to provide false or misleading information to a mortgage lender is fraud. Fraud is an offence under the criminal code of canada.
there are two prominent kinds of mortgage fraud today: one involves scams that attempt to illegally acquire property—‘fraud for property’—and one wherein schemes are designed to squeeze money out of transactions involved when a property is exchanged between buyers — ‘fraud for profit’.
the No. 1 rule to remember when it comes to real estate investments or any investments; if it sounds too good to be true, then it probably is.
Mortgage fraud Processes
Straw Buyers: People who are offered money to lend their identity and are considered phoney loan applicants. They are often offered several thousands of dollars for the use of their name and good credit information. Straw buyers can also sign documents that contain false information or information they cannot prove. For example, stating residency where you do not reside is considered fraud.
Property Flipping: Involves a dishonest seller who artificially inflates the value of a property. This involves fraudulent appraisals, false loan documentation and exaggerated incomes in order to secure loans. The seller inflates the price using a phoney appraisal and arranges for a buyer who can qualify for a large mortgage. Once the mortgage is delivered, the home is sold and another buyer assumes the mortgage. The phoney appraisal remains with the property through multiple transactions, making it difficult to determine the property’s true worth.
The Alberta Mortgage Brokers Association (AMBA) takes mortgage fraud very seriously. AMBA is committed to ensuring its members follow the highest standards of professionalism and the AMBA code of ethics. It is important that you take a proactive approach, as a consumer and a person on the front line, to prevent
yourself from becoming a victim.
Follow the suggestions below the next time you are thinking about investing in real estate.
Invest Wisely
Do your homework! Make sure you are using a licensed mortgage broker who is registered under the Real Estate Act in Alberta. Licensed mortgage brokers are required to conform to a code of conduct enforced by the Real Estate Council of Alberta (RECA). Contact RECA at 403.228.2954 to ensure your broker is licensed. Even better choices are AMBA members, they’re all licensed, because they truly believe in helping their clients and adhere to AMBA’s best business practices.
Before you buy, have a REALTOR® show you the listing history on the property. Check the number of sales, price ranges, and community prices.
Get your own REALTOR® or independent representation for your purchase (if the seller objects, something is wrong).
Make sure your REALTOR® is a licensed associate with RECA.
Ask for a copy of the land title search.
In the offer to purchase, include the option to have the property appraised by a designated or accredited member of the Appraisal Institute of Canada. Who is also authorized by RECA.
Make sure your deposit is being held in a trust account.
AMBA is committed to providing you with helpful information regarding the real estate and mortgage markets.
to learn more about mortgage fraud and the red flags, visit: www.amba.ca and www.servicealberta.gov.ab.ca/895.cfm.

Popular posts from this blog

Budget 2025 & the Alberta Mortgage Market: What Buyers and Homeowners Need to Know

  The federal government has released its 2025 budget, and while the focus is largely on long-term housing supply, there are several key items that matter for buyers, homeowners, and investors in the Edmonton-area markets — including Spruce Grove, Stony Plain, St. Albert, Leduc, Beaumont, and Sherwood Park . Below is a clear, Alberta-specific breakdown of what changed, what didn’t, and how this affects mortgage decisions over the coming year. 1. The Rate Environment: What It Means in Alberta The Bank of Canada recently reduced its policy rate to 2.25% , bringing mortgage prime down to 4.45% . This matters for our markets because: Variable-rate mortgages are becoming competitive again. Payment shock for renewals may ease slightly. But—and this is key— we do not expect dramatic further rate drops due to ongoing inflation pressures. Bottom line: Alberta borrowers now have more flexibility. Variable may start to make sense again, but choosing between fixed and variable...
Read more

New and Improved Website Coming Soon... and some updates! :)

I am so happy to announce that I will be having a new website I am designing! What a learning curve I can tell you - I had someone plug in the theme to use and help with some charts and pictures but I am happy to say I have been the one to put it mostly together! I think however I will stick to Mortgage Building vs Web Building! lol, I am way better at the former than the latter that is true. Speaking of mortgages, as you already know the Bank of Canada has already left the overnight rate as is... so what does that mean for you? The lenders are still offering stable rates with nothing really going up to high or down to low... rates have been pretty consistant. The thing that has not remained steady are mortgage products. Most lenders have now all followed suit in regards to using a 3% payment caculation on all unsecured lines of credit and credit cards vs using the provable payment. This makes things I find tight for First Time Buyers when looking at what they qualify for. For exampl...
Read more

The Tricky Thing About Rates, When Your Under 80% Loan to Value....

I will dive right in. The rate market is a tricky thing currently for most regular people to understand. They see rates posted online that seem amazing, do their applications and then find out the rate changed somewhere in the process and not for the better. Response, anger - usually at the broker or banker they were dealing. So let me try to break this down a little so that it may begin to make more sense. Since the newest Government changes we have the Stress Test, this one everyone know, except not everyone knows what it means. In a nut shell, any insured mortgage needs to qualify at the Bank of Canada Rate (5.34% as of April 23, 2019) regardless of the actual paid rate on the mortgage. Now here is some information most people do not know, so buckle up as this road gets a bit bumpier. Rates change based insured, insurable or uninsured and then again for insurable your loan to value comes into play for the rate as well. Insured means, CMHC or GE insurance premiums are include...
Read more