Mortgage Fraud Prevention Tips

Canada Mortgage and Housing Corporation (CMHC) has compiled several helpful tips to protect borrowers against becoming victims of mortgage fraud.

Misrepresentation of information

Mortgage fraud occurs when someone deliberately misrepresents information in order to obtain mortgage financing that would not have been granted if the truth had been known. This can include:

• Misstating one’s position or inflating one’s income or length of service at their job
• Misstating employment status (ie, salaried/full-time versus contract, part-time, hourly, commission-based or self-employed)
• Misrepresenting the amount and/or source of the down payment
• Purchasing a rental property and misrepresenting it as owner-occupied
• Not disclosing existing mortgage and/or debt obligations
• Misrepresenting property details or omitting information in order to inflate the property value
• Adding co-borrowers who won’t be residing in the home and don’t intend to take responsibility for the mortgage

Another common form of fraud is when a con artist convinces someone with good credit to act as a “straw buyer.” A straw buyer is someone who agrees to put his or her name on a mortgage application on behalf of another person. In return for their participation, straw buyers may be offered cash or promised high returns when the property is sold. Often, straw buyers are deceived into believing that they’ll not be held responsible for the mortgage payments.

Consequences of misrepresentation

Borrowers who misrepresent information and straw buyers who allow a property to be purchased in their name are committing mortgage fraud and will be responsible for any financial shortfall in the event of default. They may also be held criminally responsible for their misrepresentation.

Reporting fraud

If you suspect that you or someone you know has been the victim of mortgage fraud, contact your local police department or The Canadian Anti-Fraud Centre:; 1-888-495-8501;
To find out more about mortgage fraud, visit the fraud prevention section of the Canadian Association of Accredited Mortgage Professionals (CAAMP) website:

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