Definition
Mortgage fraud is defined in the Canadian Criminal Code and can result in prison sentences up to 14 years. The most common types:
**1. Income misrepresentation**: overstating income, falsifying T4s or employment letters to obtain a higher loan amount.
**2. Inflated price ('kickback')**: seller and buyer agree on an artificially high purchase price. The buyer borrows more than the true value and receives part of the excess from the seller.
**3. Straw buyer**: a person with good credit purchases on behalf of another who could not qualify.
**4. Value fraud**: a fake appraiser certifies an inflated value.
**5. Title fraud**: fraudulent third party who borrows against a property they don't own (identity theft + fraudulent mortgage).
Mortgage broker obligations: FINTRAC, due diligence obligations (KYC), reporting suspicious transactions. A broker who turns a blind eye can be held criminally responsible.