I wanted to share with you a story that caught my attention. As you may know, rising interest rates make it harder for potential homeowners to get approved for a mortgage. However, some real estate agents are still able to complete housing transactions. Through an undercover investigation, CBC Marketplace found that a group of real estate agents, mortgage brokers, and bank employees were helping to make mortgage fraud happen.
Newcomers and first time homebuyers are particularly at risk, as they may not completely comprehend the home-buying process. But, luckily they are caught on hidden camera offering to provide buyers with forged employment, salary, and tax documents in order to get loans for which they would not otherwise qualify.
Let’s examine RECO’s reaction to the mortgage fraud crisis and the Registrar’s statement.
“We are investigating these allegations and assessing next steps. Be assured that RECO will prosecute any registrants who are proven to have engaged in mortgage fraud.
We are aware of recent allegations that some real estate agents and brokerages in Ontario are facilitating mortgage fraud. To whatever extent this is happening, it must stop.
We are investigating these allegations and assessing next steps. Be assured that RECO will prosecute any registrants who are proven to have engaged in mortgage fraud.
Such conduct is a breach of the Real Estate and Business Brokers Act, 2002 (REBBA) and also breaches other laws, including the Criminal Code of Canada.
Prosecution for falsifying 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 RECO registration. More severe penalties could be levied if individuals are convicted under the Criminal Code.
It is also illegal for a real estate agent to ask a consumer for money to get their loan approved.
RECO takes this matter seriously and encourages anyone with evidence of mortgage fraud occurring to report it to authorities, such as the Financial Services Regulatory Authority (FSRA), which regulates mortgage agents, RECO, or the local police service. You can file a complaint with RECO here.
In addition to being illegal, such activity undermines consumer protection and confidence in the real estate sector. We expect all real estate professionals to support us in driving home the message that there is zero tolerance for this behaviour in the real estate industry.
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