If Canadians aren't careful, we're going to start looking a lot like our neighbors to the south in the United States. We like to think that we're better at managing our money, but in the last few months, some troubling trends have emerged here in Canada. One of the most troubling is that Canadian household debt has swelled beyond U.S. household debt. Now, it appears that Canadians are becoming interested in mortgage fraud.
Mortgage fraud is on the rise amongst Canadians. The Financial Post cites a report from the credit bureau Equifax that points to a huge increase in mortgage fraud in Canada -- an increase of 150% in dollar terms between 2010 and 2011.
How are Canadians Committing Mortgage Fraud
One of the most common ways that Canadians are committing mortgage fraud is to use fictitious identities to help increase credit. This is one way to bypass the need to work hard at improving one's own credit score. The Financial Post reports on the increase in fake identities to borrow:
One growing trend is people setting up fictitious identities, building up credit for those fake people and then using the credit to borrow. Equifax says five years ago it had identified 300 such fictitious identities in its national database. Now there are more than 2,500.
However, the biggest form of mortgage fraud is lying about income in order to qualify for a larger home loan -- and a larger house. Borrowers fudge information about their income, or about debt levels, in order to gain approval that allows them to buy bigger houses. This has long been a common practice in the United States.
Unfortunately, it appears that Canadians are starting to get in on the act of trying to buy more house than they can truly afford. Indeed, the lure of getting a bigger house by borrowing more is strong. However, it is one of the reasons that the U.S. housing market crashed so hard, and why it is still struggling. With Canadian household debt climbing, including credit card debt, it doesn't make sense for Canadians to burden themselves with homes they can't truly afford.
Instead of committing mortgage fraud to make it look like you have a good credit score, or lying about how much money you make, honestly evaluate your financial situation. Sit down and figure out how much you can really afford, and look at your credit situation. If your situation is questionable, work to truly improve your credit score, rather than try to fake your way through it. You'll be in a better financial situation -- and you'll avoid the criminal charges that can come with mortgage fraud.
