Equifax Canada (NYSE:EFX) data suggests high-risk and suspected fraudulent mortgage activity is on the rise noting a 52 per cent increase in suspected fraudulent mortgage applications since 2013.

According to data from Equifax’s enterprise fraud management solution, ‘Falsified Account Statements’ and ‘Falsified Documents’ were the most prominent application tags, as reported by investigators. The other was ‘Conflicting Information’. Of those applications flagged, 67 per cent were from Ontario while the next highest was 12 per cent from B.C.

Equifax also conducted a survey to chart the attitudes and perceptions of Canadians with respect to the current housing market. One-in-five Canadians, who do not have a mortgage, indicated they are nervous they will never own a home because of rising prices and want to buy a home but can’t because of the down payment.

“We’re certainly seeing more mortgage applications being flagged as suspicious by our reporting institutions,” said Tara Zecevic, Vice President, Customer Insight at Equifax Canada. “While we cannot entirely attribute these increases to consumers overstating personal income or falsifying applications, we do want to remind people that there are serious consequences for making false or inaccurate claims on any loan or mortgage applications. Not only will it stretch your finances, it is in breach of your contractual obligations with the lender, and simply put, it’s against the law.”

Little White Lies

With respect to mortgage fraud, the results of the recent Equifax survey showed:

  • 13 per cent of Canadians indicated they felt it was okay to tell ‘a little white lie’ when applying for a mortgage to get the house they want.
  • 16 per cent said they believe mortgage fraud is a victimless crime
  • 8 per cent admitted to misrepresenting the facts on a credit or loan application

The Cost of Buying a Home

When asked about housing prices, the results of the recent Equifax survey showed:

  • 84 per cent believe that the cost of home ownership is too high for first-home buyers today
  • Nearly three-in-ten Canadians cite ‘more demand than supply’ (29 per cent) and ‘foreign buyers’ (27 per cent), as the main factors driving up home prices
  • B.C. residents (compared to other provinces) were significantly more likely to cite foreign buyers as the top reason for home prices being driven up (75 per cent versus 42 per cent for all other provinces, respectively)

Examining Trust

When asked about who they trust in the home-buying experience, the results of the recent Equifax survey showed:

  • 44 per cent of Canadians trust real estate agents the least during the home-buying experience
  • About one-in-four also distrust homeowners (27 per cent) and home inspectors (26 per cent)
  • 20 per cent distrust mortgage brokers, another 16 per cent don’t trust their bank and equally 16 per cent have little trust in their insurance agent
  • Only 9 per cent said they trust all professionals involved in the home-buying experience

The survey was conducted online using Leger’s weekly OMNI via LegerWeb, capturing a representative sample of 1,547 Canadians from across the country. A sample of this size would yield a margin of error of +/- 2.5% 19 times out of 20.

Source: Equifax Canada

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