CBC’s recent Marketplace program on rampant mortgage in Canada was nothing new and people on the ground know that it has been a practice, especially for greedy, law-breaking pushers for a long time with countless stories of people paying the extra fees to get their income up so they can qualify for million plus loans on houses and other types of properties. DESIBUZZCanada recently heard a story of a well known Punjabi music video maker who qualified for a mortgage on a big farm using this practice and realtors and mortgage brokers have been openly telling buyers that hey we can do this for a fee.

By DESIBUZZCanada Staff With News Files

TORONTO – CBC’s recent Marketplace program on rampant mortgage in Canada was nothing new and people on the ground know that it has been a practice, especially for greedy, law-breaking pushers for a long time with countless stories of people paying the extra fees to get their income up so they can qualify for million plus loans on houses and other types of properties.

DESIBUZZCanada recently heard a story of a well known Punjabi music video maker who qualified for a mortgage on a big farm using this practice and realtors and mortgage brokers have been openly telling buyers that hey we can do this for a fee.

While the CBC story has again put mortgage fraud, which is criminal and needs to be harshly punished, at the forefront in Canada at a time when interest rates are through the roof and qualifying now with fake income or real is impossible for big mortgages.

But do the banks and regulators have the appetite to put an end to this criminal practice and deal with the offenders in a meaningful way to halt doing this. That remains to be seen as now the housing market is in the dumpster and those looking to make millions from flipping have left the market or are crying due to the black hole of high costs to maintain the properties they bought.

CBC Marketplace exposed some networks of real estate agents, mortgage brokers and bank employees facilitating mortgage fraud for a fee. And they did it by recording on hidden camera offering to connect buyers with fabricated documents showing fake employment, salaries and tax filings, so buyers can obtain loans they would not otherwise qualify for.

It's a lucrative business. Real estate agents say the teams charge one per cent of the mortgage amount for the fabricated mortgage application. This is in addition to other commissions that can be earned once the sale is finalized.   

On the sale of a $640,479 home, the average sale price in Canada, a real estate agent would typically make $16,000 to $32,000 in commission, while the mortgage agent could earn upward of $2,550 in commission from a lender.

While some consumers actively seek out and participate in this fraud, Marketplace reported that some real estate agents are also taking advantage of unwitting buyers. Newcomers are particularly at risk, as they may not fully understand the home-purchasing process. New Canadians are also less likely to immediately qualify for a mortgage at one of Canada's big banks, as their employment and credit history in Canada is more likely to be limited.

Experts in law and financial crimes say what Marketplace has uncovered is illegal under Ontario's Real Estate and Business Brokers Act and the Mortgage Brokerages, Lenders and Administrators Act. Submitting a fraudulent mortgage application is also a violation of Canada's Criminal Code.

This crime also has repercussions for Canadians as a whole, says Dan Eisner, CEO of True North Mortgage.

"As interest rates rise and house prices drop, these buyers are most likely to default on their payments and that can put further downward pressure on the housing market through panic sales," he said.

True North Mortgage has detected and stopped multiple fraudulent applications submitted to the company, along with counterfeit tax and employment documentation such as T4s and letters of employment that reference fake company names and phone numbers, where a real person will pick up and a real website exists.

For real estate agents, falsifying mortgage information or assisting in the falsifying of information can result in fines up to $50,000, prison for up to two years, or suspension or revocation of the agent's licence.

Mortgage fraud is a growing problem, according to Carl Davies, head of fraud and identity at Equifax Canada. The credit bureau flags between 15,000 and 24,000 suspicious mortgage applications each month, for lenders.

"Sixty-seven per cent of the applications that we find, or are tagged by our members as fraudulent, are actually related to that kind of misrepresentation," he said. "It's by far and away the biggest indicator of fraud or biggest risk of fraud we see in that space today. "

CBC investigation found that six out of ten real estate agents offered to help would-be buyers fraudulently qualify for a mortgage.

"Income is not an issue," said one real estate agent while showing documents he was working on for other clients. "This is what we turn into their income. Even if you are making zero dollars, even if you are a housewife, we can make the income. The only thing we cannot make is credit."

"You know, by books, you will not qualify," said another agent, who went on to describe how his contacts could help. "They will do some documentation showing that you guys are making more and they will get you what you want. But they cannot openly say it out in public because that's not true."

"They will make a T4, they will make like she is on the payroll, they will use any company's payroll and put their name onto that, right," said a third. 

Three of the six real estate agents caught offering to facilitate mortgage fraud work for HomeLife Miracle Realty Ltd., which has five brokerages across the Greater Toronto Area and one in Cambridge, Ont. Marketplace has also spoken with several buyers who say agents working for the same brokerage pushed them toward fraudulent mortgage applications or submitted one without their knowledge.

When reached for comment, the agents documented on hidden camera either didn't respond or told Marketplace they refer clients to legitimate brokers but don't deal in mortgages themselves. 

Ajay Shah, the broker of record for HomeLife Miracle Realty Ltd., said he does not condone the behaviour Marketplace told him it captured on camera, and said the three agents documented represent just a fraction of their sales and the 3,000 agents working under his supervision. 

If shown evidence of wrongdoing, Shah said he would act but ultimately opted not to participate in an on-camera interview and did not view the footage.

"Of course, the maximum I can do is fire them because I'm not the authority to take the licences away from these [agents]. That only RECO can do," Shah said.

Forensic accountant Jennifer Fiddian-Green says these findings are an indication the real estate industry needs better oversight. 

"We need the regulatory bodies to monitor more and go in and do practice inspections, all of that," she said. "We need our people on the front lines to be alert and agile so that we can respond."

Mortgage broker Sanjeet Mand agrees that a lack of enforcement is allowing this crime to flourish in the real estate and mortgage industry. 

"I think it's insidious," he said. "I think we need to get these people out of this business." 

With News Files from CBC News