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 Mortgage fraud is commonly defined as the deliberate use of mis-statements, misrepresentations or omissions to fund, purchase or secure a loan. Simply put, mortgage fraud is any scheme designed to obtain mortgage financing under false pretences, such as using fraudulent or stolen identification or falsifying income statements.
Stolen and counterfeit identification and financial documents – such as job letters, tax forms, RRSP slips and pay stubs – are tools that underpin mortgage fraud. Methods of obtaining personal and financial information range from theft and online data mining to compromising corporate databases and using black-market websites that sell stolen data. Criminal groups use the stolen and counterfeit information to compile fraudulent identities and financial profiles and to obtain mortgages illegally.
Mortgage frauds commonly involve the cooperation of mortgage industry insiders. Any individual within the mortgage industry can potentially be involved in mortgage fraud; from the purchaser, vendor, real estate agent, and mortgage broker to the lawyer, credit agency employee, lender and title insurer. These insiders may, for example, knowingly or unknowingly accept the use of false personal or financial information, use inaccurate appraisals, or transfer mortgage funds to an individual knowing they will be misused.
Mortgage fraud schemes range widely in terms of sophistication and complexity. Common features in these schemes include misrepresentations of the borrower’s income and/or identity and manipulation of the property’s age, size and value. Generally, borrowers fraudulently overstate their income and use false names on mortgage documents. In addition, the targeted property is often fraudulently described as newer, larger and in better condition than it is in reality.
Mortgage fraud can be separated into three general categories though more than one category of fraud may be involved in each overall criminal enterprise:
- fraud to further other criminal activities
- marihuana grow operations
- clandestine drug laboratories
- money laundering.
- fraud for profit
- Appraisal fraud – inflating property values
- Illegal property flipping – repeatedly and fraudulently selling a property between colluding individuals. Property repeatedly repurchased at increasingly higher values and then sold to a phantom buyer (created with stolen identity).
- Air loans – obtaining a loan for a property that does not exist
- Title fraud – using stolen identity the criminal poses as the home owner and obtains new financing or sells the property without homeowner’s knowledge.
- Foreclosure fraud – targets are low income home owners who are facing foreclosure. Criminal offers a debt-consolidation scheme and legitimate owner typically receives a cash payout from the fraudster to address immediate bills and remains in the home paying “rent” or “consolidated debt payments” to the fraudster. However, in contrast to legitimate debt consolidation programs, the fraudster pockets all payments from the owner and ignores bills and taxes which leads to debt-collection procedures against the owner. The fraudster then may re-mortgage or sell the property to an accomplice leaving the owner without the property title, homeless and in debt.
- fraud for shelter
- falsifying actual income to obtain higher mortgage that person can barely afford and when hard economic times are experienced are unable to make payments and loses their home.
MORTGAGE FRAUD RED FLAGS
- someone offers you a fee to use your name and credit information to obtain a mortgage
- you are asked to leave signature lines or other important areas on a loan application
- The loan amount on the mortgage is significantly higher than the value of the property
- The seller or investment adviser discourages you from seeing or inspecting the property you are offering to purchase
- Obtain a credit history report on a yearly basis
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Now more than ever people are communicating online using messaging, cell phone texting and social networking sites. Unfortunately, some young people and adults alike are using these forms of communication for a variety of possible criminal acts.
Facebook is one of the most common and popular social networking sites. There are over 400 million active users of Facebook worldwide, and 14 million photographs are uploaded daily by people to the website.
Despite privacy settings, Facebook profiles are not as secure as one may think. There still are ways to anonymously view private photos at any time and often way too much personal information is shared, available for the world to see.
Here are some important tips for using Facebook or other social networking sites:
- Help your kids understand what information should be private. Tell them why it’s important to keep some things — about themselves, family members and friends — to themselves. Information like their full given name, Social Insurance Number, street address, phone number, and family financial information — like bank or credit card account numbers — is private and should stay that way. Tell them not to choose a screen name that gives away too much personal information. Never give out a password or username to someone who requests them.
- Use privacy settings to restrict who can access and post on your child’s website. Some social networking sites have strong privacy settings. Show your child how to use these settings to limit who can view their online profile, and explain to them why this is important. Spend some time with a site’s privacy policy, FAQs, and parent sections to understand its features and privacy controls. The site should spell out your rights as a parent to review and delete your child’s profile if your child is younger than 13 years of age.
- Explain that kids should post only information that you — and they — are comfortable with others seeing. Even if privacy settings are turned on, some — or even all — of your child’s profile may be seen by a broader audience than you’re comfortable with. Encourage your child to think about the language used in a blog, and to think before posting pictures and videos. Employers, college admissions officers, team coaches, and teachers may view your child’s postings. Even a kid’s screen name could make a difference. Encourage kids and teens to think about the impression that screen names could make.
- Remind your kids that once they post information online, they can’t take it back. Even if they delete the information from a site, older versions may exist on other people’s computers and be circulated online possibly indefinitely or forever.
- Know how your kids are getting online. More and more, kids are accessing the Internet through their cell phones. Find out about what limits you can place on your child’s cell phone. Some cellular companies have plans that limit downloads, Internet access, and texting; other plans allow kids to use those features only at certain times of day. Talk to your cell phone provider to access texting records if you are the plan account holder.
- Talk to your kids about bullying. Online bullying can take many forms, from spreading rumours online and posting or forwarding private messages without the sender’s OK, to sending threatening messages. Explain to your kids that the words they type and the images they post can have real-world consequences. They can make the target of the bullying feel bad, make the sender look bad — and, sometimes, can bring on criminal investigations from law enforcement. Encourage your kids to talk to you if they feel targeted by a bully or threatened in any way.
- Talk to your kids about avoiding sex talk online. Recent research shows that teens who don’t talk about sex with strangers online are less likely to come in contact with a sexual predator. If you’re concerned that your child is engaging in risky online behaviour, you can search the blog sites they visit to see what information they’re posting. Try searching by their name, nickname, school, hobbies, grade, or area where you live. Speak to your ISP (Internet Service Provider) as you are the account holder.
- Tell your kids to trust their gut if they have suspicions. If they feel threatened by someone or uncomfortable because of something online, encourage them to tell you. You can then help them report concerns to the police and to the social networking site itself. Most sites have links where users can immediately report abusive, suspicious, or inappropriate online behaviour.
- Go where your kids go online. Sign up for — and use — the social networking spaces that your kids visit. Let them know that you’re there, and help teach them how to act appropriately and responsibly as they socialize online. Place your home computer in common areas like: living rooms, family rooms, kitchens, rumpus or games rooms instead of personal bedrooms or children dens.
- Review your child’s friends list. You may want to limit your child’s online “friends” to people your child actually knows and is friendly with in real life. Predators may not appear who they really are online, and often portray themselves as a school friend or young person.
- Use the internet for knowledge about online safety tips:
- ConnectSafely www.connectsafely.org
- GetNetWise www.getnetwise.org
- Staysafe www.staysafe.org
- Wired Safety www.wiredsafety.org
- Internet 101 http://www.internet101.ca/en/parents.php
- Cybertip.ca http://www.cybertip.ca/app/en/
- The Door That’s Not Locked http://www.thedoorthatsnotlocked.ca/app/en/
- Mobile Safety http://www.mobility.protectchildren.ca/app/en/
Social networking as a form of communication is the norm. The internet is an amazing place, however understanding the risks involved; and how open and vast ‘the cyber information highway’ is indeed important.
If you receive any suspicious information over the internet that you want to bring to the attention of the Medicine Hat Police please send an e-mail message to "hatcybercop@medicinehat.ca" Read more about the Technological Crimes Unit.
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