Mortgage fraud might be widespread in British Columbia

Canada, 10th May: Canada is rife with the news of $120 million mortgage fraud, one of the biggest mortgage frauds in the history of Canada for which Bank of Montreal, the victim bank, has slapped lawsuit against large number of people.

However, according to forensic reports, the recently unearthed mortgage scam is just a revelation of the widespread similar happenings in several financial institutions across the nation. Greg Draper said the incidence of the Bank of Montreal’s scam seems to be giving a vital but crucial hint to what may be happening at different places and might be a part of bigger financial scams going on for long.

Serious laxities in regulations, a highly-competitive mortgage industry and hot real estate markets in Canada are the common factors contributing in making banks and consumers a soft target to mortgage frauds in Canada, warn experts.

Although, presently, there may not be any other banks found to be victims of such mortgage scams, however, there is a strong possibility of such scams going on unabated and coming to the notice only in the coming times, warns Patrick Webb, official spokesperson of RCMP.

Every year, nearly hundreds of millions of Canadian dollars are lost due to incidence of mortgage fraud, a 2007 report by the CISC (Criminal Intelligence Service Canada) suggests.

The Bank of Montreal mortgage scam involved several groups who conspired to purchase low-priced residential property in upscale neighborhoods and then falsified documents to obtain a mortgage which was much higher than the actual price of the house from the bank. These fraudsters including mortgage brokers, lawyers and even some staffers of the bank pocket the profit thus made.

The whole incidence seems to be quite a familiar tale to Al Rosen, a forensic accountant, who does not seem to be surprised to know about the latest mortgage fraud in Canada.

A commercial crime expert employed with the RCMP, Sgt. Conal Archer states that straw buyers are allured to become a part to such mortgage frauds by saying that they are just participating in an investment opportunity which is legal in all aspects.

Archer has warned that any straw buyer found to be involved in a mortgage using illegitimate means could be liable for legal actions.

To escape mortgage frauds, follow these tips before investing in a MIC(Mortgage Investment Corporation)----
1. Ensure that the MIC information package includes details about---
• Location of the land/property to be mortgaged;
• Maximum loan to value on one property;
• Limit of maximum amount that is allowed as investment in any mortgage;
• Policy for financing of construction and towards mortgage against industrial and commercial property and bare land;
• Policy regarding mortgages on expensive properties.

2. Whether every mortgage is reviewed by the MIC credit committee?

3. Whether fund manager, members and directors of credit committee have invested their own funds? A positive answer is considered to increase security against mortgage fraud. 

4. Whether the MIC is levered, especially by institutions like any chartered bank? If yes, then such MICs are subject to strict policies for lending. 

5. Do you have access to copies of audited financial statements? 

With these simple steps, you can safeguard against growing menace of mortgage fraud in Canada.

Understanding Mortgage loan calculations can be confusing for non finance professionals.  However, you can get rates and options, hassles free using this Mortgage Rate Calculator. Their mortgage loan specialists help you make learned decision.