The Financial Services Commissioner of Ontario recently released warnings to home buyers and owners that the Canadian mortgage market could be rife with attempts at fraud. One of the areas where mortgage fraud is most likely is in refinance options.
According to FSCO, unauthorised lenders are reaching out to homeowners and others to offer second mortgage options. These equity loans are often marketed as available to home owners whether or not they have good credit. The problem is that these are possibly illegal lenders who are charging potentially illegal interest rates and fees. In some cases, the lenders are enticing home owners into second and even third mortgages on their properties.
One of the consequences of this equity feeding frenzy is that homeowners can become enmeshed in debt that cripples them. When they are unable to pay all these mortgages, they fear losing their homes.
Mortgage fraud isn't only limited to those seeking to fleece homeowners, however. According to reports, tighter lending regulations are making it more difficult for some home buyers to purchase the house they really want. These home buyers are being connected with mortgage brokers who know how to use the system to get the buyer approved even if he or she has a debt ratio that would otherwise disqualify the loan. In some cases, brokers are doctoring paperwork and making false claims to get buyers approved.
Whether you are the homeowner or the buyer, getting involved in mortgage fraud of any type poses serious risks. Working with a professional who approaches real estate and related legal matters with integrity can help you avoid such woes and protect your ownership in whatever property you do purchase.
Source: CanIndiaNews, "It’s official, mortgage fraud is thriving in Canada’s sizzling real estate market," Pradip Rodrigues, Nov. 12, 2015
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