Mortgage fraud is not a victimless crime, interview with Tara Zecevic

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Net Patrol International Inc.  Data Investigation and Forensic Services
Bankruptcy and Insolvency Trustees

Equifax Canada data shows 16 per cent of Canadians said they believe mortgage fraud is a victimless crime. While perpetrators of mortgage fraud may think it is no big deal, mortgage fraud costs the mortgage industry as a whole.

Equifax focuses on the financial future of individuals and organizations data, technology and innovative analytics. Their recent data suggests high-risk and suspected fraudulent mortgage activity is on the rise noting a 52 per cent increase in suspected fraudulent mortgage applications since 2013.

The cost of mortgage fraud is more than just the cost of the lost mortgage that may have been advanced. We talked with Tara Zecevic, vice president Customer Insight at Equifax Canada; “we want to remind people that there are serious consequences for making false or inaccurate claims on any loan or mortgage applications.”

Why is mortgage fraud not a victimless fraud?
Mortgage fraud is not a victimless crime because there is a lender in the equation. When there is a case of fraud within the system, the lender could lose a lot of money. The fraud is also impacting other costumers in terms of higher fees, inflated home costs and so forth. So it most definitely is not a victimless crime.

Can you put a number on the losses that go with mortgage fraud?
I wish I had a number but unfortunately we don’t have those statistics.

Apart from higher fees and home costs on other consumers, are there other consequences for the public?
We have seen a change in mortgages, but there is more to look at like the amount of foreign investors in the market. Changing rules and guidelines by lenders for their own protection could be another possible response. But rules can be beneficial for the consumer too.

How could extra rules protect the consumer?
The consumer would less likely get into credit obligation that could put a strain on them. A lot of times they get in that situation and over extend it. This can create a lot of stress, impact their health and even result in bankruptcy. They think a little white lie is okay: ‘let me try to inflate what I am earning a little, because I can handle the increased debt’. But sometimes they can’t handle it or the interest rate could increase to suddenly push them over the edge.

The data shows that 81% of the Canadians said the cost of a mortgage is too high. What would you suggest they do?
I think it is simply the chart of question and demand. What is happening is that incomes are not increasing in the same way that home prices are; there is a gap. One option would be to rent, another option would be to maybe live a little bit further outside of the city, but all of these are compromises. I understand that it can be challenging.

What would you advise to the consumers in general?
At the end of the day it is against to law to lie on your application so you want to be very transparent as a consumer. The other thing that we have also seen in our consumer credit reporting is that seniors are taking on more debt. Parents are helping their children in being guarantors on property. But the question is if they can afford to take on that debt within their capability. There are more factors but we did notice that increased debt of seniors. It is some food for thought.

Read the full data report here.