One In Ten Canadians Approve of Inflating Income For Mortgage Applications: Equifax

Many Canadians are surprisingly comfortable telling strangers they approve of mortgage fraud. Equifax released its latest consumer survey along with upgrades to its ClearPro fraud detection platform. The company confirmed what many have suspected — credit fraud may be rampant. It didn’t take sophisticated software to figure that out either. That was just the result of people suggesting they approved of fraud, or outright committed it, to survey takers.

Using Software To Identify Applicant and Industry Fraud

The new product upgrades aims to make it easier for lenders to determine when fraud is being committed. Beyond applicant credit checks, it will now verify broker and agent entry information. Ideally this will help to weed out industry facilitated fraud, or at least deter it. An increasing problem, as more people openly view mortgage fraud as a can’t lose situation in Canada. 

The product will also search global media and sanctions lists, to curb globe trotting fraudsters. No more, “whoops! We didn’t know they were on the front page of a foreign newspaper for robbing taxpayers, and fleeing to Canada.” Well, I’m sure it’ll still happen, but at least the lender will have a flag on the file. 

Equifax Expanding Fraud Detection Tools 

The product upgrades come after Equifax has consistently found Canadians openly endorse mortgage fraud. Last month’s survey found 16% of Millennials think it’s acceptable to inflate their income on an application. The general rate for the whole population was 9%. The agency also found 11% of people think mortgage fraud is a victimless crime, where all parties are winners. 

The numbers are bad, but it’s an improvement from a couple of years ago. In 2019, a similar Equifax survey found 23% of Millennials were okay with inflating income. This number was 12% for the general population. It’s a big improvement, but it really highlights how much Canadians approve of fraud. Canada had to work its way up to 1 in 10 people thinking it’s okay to commit mortgage fraud.

A higher rate for Millennials is more likely due to the fact many may need to lie to get a mortgage these days. Older demographics, especially those that bought when housing was more closely tied to income, are less likely to need to consider it. That said, this is only people that indicated they were okay with it on a survey. Most people ready to loot a bank, don’t take a survey indicating they will. 

1 In 7 Millennials Indicated They Lied On A Credit Application 

Lying to get credit is apparently a national pastime in Canada. The survey found 14% of Millennials indicated they lied on a credit application. The national total rate was 7%, meaning Millennials were twice as likely. Well, at least twice as likely to admit on a survey they lied on a credit application.

Fraud is difficult to identify, and there’s little motivation to do so in a strong economy. That also tends to be the period when people are more likely to commit mortgage fraud. If borrowers perceive the risk of not getting the credit (and missing sweet price gains) is worse than the risk of being caught for fraud, they’ll try to commit the fraud.

Mortgage fraud also has an impact on real estate prices that isn’t often discussed. Borrowers that commit minor fraud like lying about income, increase leverage. This would have the same impact as lowering interest rates for a segment.

All of a sudden, you have future demand pulled forward. It wasn’t thought to be significant enough to impact prices, but marginal buyers can distort markets at low volumes. That said, one in ten people openly admitting they’re okay with mortgage fraud, may mean it isn’t that small of a number.

For lenders, this isn’t problematic until it is. Finding out a borrower committed fraud isn’t an issue if the borrower pays their bills. It’s when an economic shock occurs, they find out which borrowers perform. Luckily, sometimes a government will let banks just forget about collecting bills.

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  • Whiskey Foxtrot 3 years ago

    But the fraudulently inflated income on their application shows they are a solid candidate, very capable of handling their bills. Clearly there’s no problem.

    • Mortgage Guy 3 years ago

      It’s an open secret there’s mortgage lenders that will fraudulently provide paystubs and fake employment, you just need to pay for it. The employment mills even pass third party verification, because who’s to say a small business isn’t employing that person?

      When they catch those brokers, the dilemma is do you take away a fraudulently obtained mortgage that performs and uptick the negative stats, or just let them keep it? A lot of heads in the sands in these situations, because revealing how bad it is might be perceived worse than letting it slide from an industry standpoint.

  • Average Man 3 years ago

    Am I OK with it? Not totally. But we all have to make compromises sometimes. If it’s what you need to do to get where you want to go, I get it.

    • Tom Wolfe 3 years ago

      How else can an average Canadian participate in society? Fraud has become the standard operating procedures for banks and otherwise law-abiding citizens. But I’m pretty certain the average Canadian will take the full brunt of the blame, and the banks will continue to report ungodly profits.

    • Paul 3 years ago

      Average man,

      So you answered yes on the survey then….

      • Average Man 3 years ago

        They didn’t ask me but… YEAH! I sure would have.

  • Tom Wolfe 3 years ago

    ‘1/10 of people openly admitting they’re okay with mortgage fraud’

    While 100% of banks lend knowing that the property isn’t worth the loan. But that’s ok because the government will cover their nut. It’s exactly the same thing. It’s all fraud.

    Why should only banks get away with it?

    • Mortgage Guy 3 years ago

      Your point works perfectly with Stephen’s last point. If the credit quality was high, why wasn’t there a verification for mortgage deferrals? They let homes appreciate during that period, but didn’t require any loss of income to defer payment?

      It may be because they didn’t want to find out what the real credit quality is, so they tried to drum up liquidity and hold payments, even if you were “employed” in the same job, to make sure no one defaulted.

      All fun and games until you realize they just helped fraudsters at the expense of new homebuyers.

  • Estevam Meneses 3 years ago

    Mortgage brokers are specialized in fraud in your income in Canada.

  • Tom Wolfe 3 years ago

    Netflix is currently streaming the movie Hell or High Water.

    It’s a pretty good story about two marginalized people who are about to loose their home due to the predatory lending practices by their bank.

    Spoiler alert: They rob the lending bank of its own cash, leverage its greed via a trust, and pay off the debt. Clever, but the moral of the story seems to be that American stole land from the indigenous, and now America is having its land stolen by banks.

    But we all know that truth is always stranger than fiction. I’m genuinely terrified to find out what’s next.

  • SH 3 years ago

    In Brampton it’s probably more like 1 in 2.

    • Neo 3 years ago

      Well ya….Brampton doesn’t stake claim to the insurance fraud capitol of Canada for nothing.

    • Tom Wolfe 3 years ago

      1 in 2 is way less than *all of the banks, and now the banks own the insurance companies too. Don’t blame Brampton, I think Sting said ‘some are too dumb to steal’….the banks are not dumb.

  • Little Birdie 3 years ago

    Wow. Correct me if I’m wrong, but isn’t mortgage fraud one of the big contributing factors to the 2008 housing crash? The other being subprime loans… which you could say is almost an alternative option to falsifying your income to secure a mortgage.

  • The Truth Shall Set You Free 3 years ago

    Wait til the BoC halts buying mortgage bonds from the banks. All lending will stall. Even now it’s already changing as banks now are actually sending out appraisers to look at homes being purchased so they know what’s on the horizon.

  • Chris 3 years ago

    Sone years ago a US based insurance company specializing in mortgage insurance withdrew from Canada because of the reckless lending nature of mortgage lenders. That speaks volume back then and the predatory nature continues.

  • Rick 3 years ago

    It’s not that they want to lie, it’s that they have no choice but to lie. In reality most peoples income couldn’t afford an outhouse.

Comments are closed.