As a mortgage professional, there are steps you can take to protect your clients and your business from fraudsters:

  1. You should verify the client’s identity and follow up on discrepancies in mortgage documentation to fight fraud and protect consumers. 
  2. Verify a client’s identity by reviewing multiple sources of valid government issued identification (at least one government-issued photo ID).

Reduced mortgage affordability has increased the risk of fraud. Lowered access to financing and stricter lending criteria might lead to more consumers misrepresenting information on their mortgage application. This can occur with or without the knowledge of their mortgage agent or broker.

Perpetuating fraud, whether knowingly or not, can cause borrowers to be denied financing on future mortgage applications. It may also result in penalties or disciplinary action for participating licence holders.

In fact, being involved in mortgage fraud can lead to your license being revoked and possible criminal charges.

Final guidance issued

In September 2023, FSRA published final guidance on detecting and preventing mortgage fraud. We encourage you to consult this guidance to ensure you’re not unwittingly facilitating mortgage fraud.

The guidance shows what constitutes reasonable steps to verify identity and documentation such that you can detect, prevent and avoid facilitating fraud. We expect principal brokers and representatives train and supervise their staff to ensure compliance with these established processes and the Mortgage Brokers, Lenders and Administrators Act.

Other segments of the mortgage industry are also involved in mortgage transactions and play a role in detecting and preventing mortgage fraud. These include real estate agents or brokers, appraisers and lawyers. Many of these sectors have taken steps to provide similar guidance to their members such as the Law Society of Ontario’s notice to the Professions regarding Exploitative loan agreements.

Work with your regulator to reduce fraud

We urge you to report actual or suspected fraud to us. You may file a complaint or take advantage of our Whistle-Blower program. This program helps ensure confidentiality and protection from reprisals for those who come forward to report potential fraud and other misconduct. 

What’s next

During the next fiscal year, we will start examinations to ensure industry is implementing the expectations outlined in the fraud guidance in accordance with each individual firm’s business model.