• A Story About Fraud From My Personal Experience
    Lately FSCO (Financial Services Commission of Ontario) has been cracking down on mortgage professionals who commit fraud to assist their clients in obtaining a mortgage. But for every case of fraud that gets caught, how many go through?

    I recently started working with a First Time Home Buyer client. She’s a lovely lady, owns her own company and a single mom to boot! She wanted to purchase a home for her and her daughter as she was overpaying on rent and the landlord was not fixing what was broken.

    After she filled out the application, I asked her for supporting documents, T1 Generals and Notice of Assessments for last two years. Because she was self-employed, I also asked her to provide me with her last 12 months of financial statements and her business license.

    She didn’t have any of the documents on hand but agreed to gather them for me and get them to me at a later time. Using the information she had provided to me on the application, I started a preliminary search for a lender.

    It is becoming increasingly difficult for self-employed individuals to get mortgages, in addition to the extra documents required, most lenders want to see all the information ahead of time before they will review the mortgage application. The problem with a lot of self-employed borrowers (according to the lenders) is that many of them will work with their accountant to lower their annual income through wirte-offs and claiming expenses to the company, so they don’t incur high taxes,

    Although accountants have lots of tricks to lower your income at tax time, it actually makes it more difficult for you to get a mortgage.

    Anyway, my client asked her accountant for the T1s and NOAs. Her accountant wrote to me saying that she would like to know what amount of income she required to prove on her documentation in order to qualify for the mortgage. I was gob-smacked!

    I told her that the figures dictate the mortgage amount, not the other way around. The accountant said it would be pointless to provide the documents as they were because there wouldn’t be enough income, and therefore she was willing to “fudge” the amount so that the client could get qualified for a higher amount.

    Any misrepresentation of facts on a mortgage application is fraud. Plain and simple.

    As a mortgage agent, my reputation and my license mean everything to me. Once you cross that line, there is no return!

    I kindly responded to the client that I was not willing to proceed working with this accountant and that if she wanted to work with me, she would need to provide me with her existing documents. Unfortunately she decided to stay with her accountant!

    I wish her all the best, however it is good to note that if FSCO is alerted that a mortgage was obtained under false pretences, the mortgage agent could lose their license and the mortgage could be called by the lender. This means full payment would be required immediately or the house would go into foreclosure. Not pretty. Not worth the risk.

    If you are looking for a mortgage agent who is above board and committed to the highest ethical standards, you have come to the right place! If you are looking for a mortgage agent who is willing to “fudge some numbers” and make your application look better than it is… unfortunately I won’t be able to work with you.

    To your Wealth!