# Mortgage Fraud Rampant..........



## sags (May 15, 2010)

Equifax reported they uncovered 400 million in mortgage fraud........last year alone. It has increased by 150% in the past year. That is what they uncovered...........not everyone is getting caught.

http://www.calgaryherald.com/business/Equifax+uncovers+400M+mortgage+fraud/6182947/story.html


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## K-133 (Apr 30, 2010)

I think the word rampant is a bit much. If you read carefully, a 150% increase of minuscule is still minuscule.

$400M / $3,000,000M = 0.0001333%

This isn't to say that $400M is nothing to scoff at, simply that 1% of 1% of 1% is not likely something that will disappear.


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## kcowan (Jul 1, 2010)

I think it illustrates that the mortgage lenders here are just as succeptible to fraud as those in the states. Granted it did not occur in the same volume but that is no reason for us to be complacent.

Also Equifax says that the $400 million is just a sample of what is really happening now. One case:


> The scheme was so huge that the Law Society of B.C. raised special contributions from its lawyer members to compensate the victims. As of 2009, it had paid out $38.4 million for the Wirick fraud alone.
> 
> Over a 40-year period before that, the society's compensation fund disbursed a total of $52 million for all cases of lawyer misappropriation.


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## HaroldCrump (Jun 10, 2009)

Rest assured, ladies and gentlemen, those mortgages are secure.

_We_ have secured it via CMHC.
_Our_ federal govt. has further guaranteed those mortgages via the $125B mortgage bailout fund for the banks, out of which, _only_ $65B has been used up until now.

Nothing can go wrong.


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## canadianbanks (Jun 5, 2009)

K-133 said:


> I think the word rampant is a bit much. If you read carefully, a 150% increase of minuscule is still minuscule.
> 
> $400M / $3,000,000M = 0.0001333%
> 
> This isn't to say that $400M is nothing to scoff at, simply that 1% of 1% of 1% is not likely something that will disappear.


Any way you look at it, it's still a huge increase percentage wise. If this is establishing a trend, we'll have a serious problem in the future.


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## Berubeland (Sep 6, 2009)

These are the ones they caught. Mortgage brokers are not looking too closely at documents right now. If the Sh$t hits the fan in the market and people start looking at the actual papers... it'll be shocking. 

We have a very similar process for rental applications and you'd be surprised at what passes as a "job letter" I seen some scribbled in pencil on notepaper with some guy's cell phone number. 

So we'll see.


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## sags (May 15, 2010)

Nothing can go wrong.............for the banks.

Since the CMHC guarantees the bank will get paid........what due diligence are they doing when they accept whole mortgage and heloc portfolios from the banks?

It is our dime, it would be nice if they at least took a peek inside the envelope.


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## ShawnTH (Apr 9, 2011)

What steps can the average person take to avoid mortgage fraud?

We paid off our mortgage, and have received the letter from the bank requesting we pay the discharge fee. We haven't paid it off yet, as there is a greater chance of becoming a victim once there is no mortgage / lein held against the property. Any down side to this strategy? 

What are the most cost effective ways to protect yourself from mortgage fraud?


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## Eclectic12 (Oct 20, 2010)

kcowan said:


> I think it illustrates that the mortgage lenders here are just as succeptible to fraud as those in the states. Granted it did not occur in the same volume but that is no reason for us to be complacent.
> 
> [ ... ]


Yup ... I though it was silly when I saw a US investigative news show profile how it was to use the public record to register a false sale of a property. Average time required was fourteen days to register the fraudulent sale and just over two year for the legitimate owner to get title back.

About fifteen years later a Canadian equivalent profiled the same fraud in Canada with similar timings.

That was followed by the report of the couple in Toronto who had their condo "sold" out from under them. As the couple pointed out, if a letter was sent or an appraiser had showed up at their door, they could have put stop to it before all the legal fees etc. *sigh*


Cheers


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## dogcom (May 23, 2009)

ShawnTH I think it would be a good idea to put on a HELOC and borrow a small amount to fill up a TFSA or something so there is a loan on the title.


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## Cal (Jun 17, 2009)

I think this is exactly what some of the upcoming budget release will be addressing.


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## ShawnTH (Apr 9, 2011)

dogcom said:


> ShawnTH I think it would be a good idea to put on a HELOC and borrow a small amount to fill up a TFSA or something so there is a loan on the title.


Thanks dogcom. I looked at title insurance, it would set us back $300+, and I think that to set up a HELOC, the cost is about the same. I guess if we set up the HELOC, there is always the knowledge that there is some "cheap-ish" credit out there, should we need it.

We have the TFSA's maxed out right now, so I would have to find something else to put the small loan on. We were considering a rental property or some REIT's. I guess we have to ponder it a bit more.


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## HaroldCrump (Jun 10, 2009)

Couldn't find any any thread to post the following:

*Flaherty Says He’s Planning Changes on CMHC Rules*

_“We do intend to have some changes with respect to reporting by CMHC, particularly with respect to securitization,” Flaherty said today, adding the country’s banking regulator is “engaged” on the matter.

Flaherty, who has resisted calls from lenders to tighten mortgage rules to stem demand for new homes, said in his March 29 budget the government will enhance the governance and oversight of CMHC to ensure “its commercial activities are managed in a manner that promotes the stability of the financial system.” _

http://www.bloomberg.com/news/2012-04-10/flaherty-says-he-s-planning-changes-on-cmhc-rules.html

What exactly is changing?
What reporting requirements?
Are these just more useless government bureaucracy reports, for which they have to hire yet more bureaucrats and paper pushers, costing the tax payer even more money?

Or does CMHC already have skeletons in its closets that now need to be reported?

And what changes to securitization?
Are they going to stop CMHC from securitizing the mortgages?

The only change to CMHC that I want to see is its dissolution.


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## NotMe (Jan 10, 2011)

HaroldCrump said:


> Couldn't find any any thread to post the following:
> 
> 
> 
> The only change to CMHC that I want to see is its dissolution.


Harold - if they got rid of CMHC, banks wouldn't loan to people with less than a 50% downpayment, which means thousands of young Canadians wouldn't qualify for a loan (even if they can easily afford the mortgage payments) which means they rent until their 50s. That doesn't mean I'm encouraging of people to qualify for loans that are 8 times their income, but that there'sa middle ground somewhere.


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## Berubeland (Sep 6, 2009)

You can get a conventional "non CMHC approved" mortgage with 20% down payment and decent credit. Not sure where you get 50% Notme.


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## NotMe (Jan 10, 2011)

well put berubeland, I just assumed banks would become much more conservative if suddenly a big chunk of their portfolios weren't secured by the government.

in any case I will say that saving 20% for a downpayment in toronto is very difficult for the average 30 year old with kids kind of family.


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## HaroldCrump (Jun 10, 2009)

NotMe said:


> I just assumed banks would become much more conservative if suddenly a big chunk of their portfolios weren't secured by the government.


And what exactly is wrong with that?



> in any case I will say that saving 20% for a downpayment in toronto is very difficult for the average 30 year old with kids kind of family.


And in which law book does it say that "an average 30 year old with kids" should own a $640K mortgage?

I apologise if this sounds glib, but IMHO, this whole CMHC insuring of 0 down, 35 year mortgages are a major factor in the RE bubble (and all the other socio economic isssues that begets).


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## the-royal-mail (Dec 11, 2009)

I agree with Harold. As has been revealed in this conversation, it is the CMHC which is artifically pumping the RE rates. $640K for a house for middle class 30 something with kids? Ridiculous!

In my world, if I cannot afford something I do not buy it. Monthly payment is NOT an accurate measure of affordability since mortgages make you vulnerable to future interest rate increases.

If the CMHC were to be disbanded tomorrow, it would cool and lower our absurd property valuations, people would be required to save larger DPs but at least they would be forced to SAVE (heaven forbid anyone does that) longer and adjust their expectations. As pointed out above, they would realize 20% of a $640K mortgage is not affordable and people would look for cheaper houses, or rent. This country cannot survive on an artificially inflated RE industry forever.

It's not the job of the gov't to ensure you have a $640K house - if you want it, save up and pay for it.


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## andrewf (Mar 1, 2010)

^ If CMHC stopped insuring new loans tomorrow, the market would probably crash.

There are many people with mediocre credit that would not otherwise be eligible for the LTV they have, and definitely not at the rate they borrow at.

I agree, though, that CMHC should be much more conservative. It is run by a bunch of RE industry individuals, with questionable impartiality.


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## Toronto.gal (Jan 8, 2010)

HaroldCrump said:


> And in which law book does it say that "an average 30 year old with kids" should own a $640K mortgage?


Exactly! But for sure many people buy things [not only homes], that simply does not match their income. 

Like this: [I saw the interview on tv and was astonished] 

http://steadfastfinances.com/blog/2...driver-losing-her-800000-home-to-foreclosure/ 

Many would blame just the banks. :rolleyes2:


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> Exactly! But for sure many people buy things [not only homes], that simply does not match their income.
> 
> Like this: [I saw the interview on tv and was astonished]
> 
> ...


That article is 100% garbage. As the author himself notes, he didn't know how much income the husband makes or any other financial facts (ie size of mortgage).


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## Toronto.gal (Jan 8, 2010)

Yes, details are missing as noted in the article [when do we really know everything?]. 

I saw the interview live and was surprised about the mystery surrounding the balance of details, but the fact of the matter is that many such cases DO exist and that had been my point FP.


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## HaroldCrump (Jun 10, 2009)

Governments have to stop messin' about with RE.
Every single RE bubble and subsequent disaster in the last 40 years has been caused by govt. manipulation of interest rates (specifically to fuel RE) and/or lax lending rules.
Right from the loosening of lending rules of Gennie Mae, and the disastrous twin agencies of Freddie Mac and Freddie Mae.
Then removing the state caps on interest rates to fuel the sub prime market in the mid 1980s (I forget the act of Congress that did that, but could be found with Google searches).

Freddie Mac was explictly involved in the large scale export of CDOs to foreign investors and governments that had excess USDs because of their trade surpluses, which helped finance American's fiscal debt.
And this is not the 2007 crisis.
This dates back to the early 1980s.

RE is the easiest cash cow for governments to expand their tax revenues, and finance their drunken spending.


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