Mortgage fraud caught on camera: Undercover investigation (Marketplace)

♪ ♪ With interest rates so high, is

mortgage

fraud

coming? We are

undercover

listening to the speech. Real estate agents tell home buyers to fake what they earn and what they can afford. There is nothing gray about it. It is absolutely a

fraud

. They are breaking the law. Do you think you have a problem? You can't afford to miss your Market. We'll take you inside

mortgage

fraud, where it begins. As interest rates skyrocket, more people are driven to commit fraud to get a loan. Marketplace is

undercover

by catching real estate agents offering fake taxes and other documents to prove fake salaries.

If these deals go through, agents will make thousands, but buyers could be in danger. New Canadians are often targeted, like Swati Dewale and Amal Wulunj, who moved from India. We had that Canadian dream, you know, having a house, getting a car, you know, all the things you would do -essentially-- -Plan a family. Yes, he's also planning a family, obviously. But they have a limited credit history. We weren't even sure if we'd be eligible to get a mortgage in the first place, right? And that was the first thing we did. We wanted to know if we would get one, considering we are so new to the country.

They ask for help in a real estate group chat and get a hopeful message. A real estate agent who also offers to help you with the mortgage. Agent works with HomeLife/Miracle Realty. They share their data. Good income, decent down payment, credit scores, okay. Those numbers should get them a home worth up to 850,000. But the agent assures them that he can get them more and helps them make an offer of $1,000,000 for this house. Did you get pre-approved for a mortgage to look at houses? -No. No. Who told you not to get pre-approved? Our real estate agent.

That advice is bad because the bank rejects the mortgage that Swati and Amal need. The agent says there is no problem. What did the real estate agent tell you about what the mortgage broker could do? He can do any paperwork and make us qualify for more mortgage. He can help him even if he needs some jugaad on his mortgage. Jugaad is basically a Hindi word, which means to manipulate it. We didn't want to go down that path. Manipulate a mortgage application? That is fraud and something we have heard is widespread. It is time we eradicate the evildoers.

So here's the microphone. Our undercover team poses as new Canadians buying their first home in the GTA. Basically, you come to Canada and start from scratch, right? You are starting from scratch. They're looking at ten properties listed by agents who they warn us may be making sketchy deals, and one company we keep hearing about, HomeLife. Speaking Hindi will help you get insider information. Our team tells agents they have the down payment, but... Cash means our screener can't prove your income. And there is no way a bank would approve a mortgage to buy this house. The agents know this and yet...

They are offering false salary and tax documents to get our partner a mortgage they should not qualify for. Another Hindi speaker even shows the tax documents he has for another client. But fakes like that will cost thousands of dollars. In total, six of the ten real estate agents openly offered to break the law in exchange for a fee. And they benefit, up to 65 large commissions for them, between 5 and 15,000 for the mortgage broker, and those false documents? A bonus of 10,000. Mortgage broker Sanjeet Mann is concerned about the prevalence of this fraud. Wow. Right off the bat, I mean, he offers to do paperwork for these people and tells them, "Hey, it doesn't matter if you have no income or have a job or not." There is nothing gray about it.

It is absolutely a fraud. It is also a criminal offense, prohibited by real estate and mortgage laws. The officer could be jailed or fined for pressuring you. Yes, I think we should get these people out of this business. What does that kind of behavior make you? Shoot our credibility. I mean, every time you talk to someone, it's like, "Oh, can you do paperwork for me? I... I need to get this property, but I don't have enough income." No, thanks. Sanjeet is not the only one raising the alarm. In Calgary, Alberta, they are also finding fraud. Lender True North Mortgage is serious about stopping sophisticated scams.

Then you see these six employment letters, three from each company. Chief Operating Officer Chirag Mehta has a keen eye for detecting fraud. The employment letter that I showed you also has a T4. But is none of this real? The company doesn't even exist. However, there is even a phone number where a real person confirms fake employment at a fake company with a website and everything. If you look at these letters, they were clearly all written by the same person, okay? And these T4 are made by the same person. So there is probably an entity organization that is doing this for clients.

Dan Eisner is the founder of True North Mortgage. You called the employer. Do other lenders do that? No, we are a little more aggressive on that front. Why do not they do it? Well, I guess it's... they look at their portfolio and then they say, "Okay, well, maybe some percentage of it is fraudulent," and they're... they're okay with that. I... can only guess. Lenders could always do more to verify an application, but at some point, that's a cost the bank has to bear, and if they... and if that cost is significant, all Canadians will pay higher interest rates. .

What could have happened if these mortgages had gone ahead? If house prices fall, these are the people most likely to default on their mortgages, and that could put downward pressure on the housing market. This fraud affects us all, creating a potentially unfair market by increasing the number of buyers, but also risking more defaults and panic selling. In our hidden

camera

test, some real estate agents do warn of what could go wrong. They are not the only ones who follow the rules. Hello, I saw your ad. Do you have some time to talk? We cold called 25 mortgage brokers in five hot markets across Canada and requested forged documents.

Let's take a look. -Wow. -He hung up immediately after. This is a guy who won't make you fake documents. Many do not engage in counterfeiting, but others do. One in five says yes, but language can be codified. So I said, "Do you charge anything for this salt and pepper thing?" And he said, "Of course I do." My team will ask for about $3,000. He himself will get 1%. We hear the word "creative" a lot. Um, "Salt and Pepper" is new to me. People may wonder if this is only happening in the South Asian community. What do you say to that?

I would say this is not just happening in this community, it is happening across the board. Swati and Amal believe that their agent's plan was to use fakes from the beginning. Was he ever tempted to go down the path of manipulation? No. No. We are very clear about that. But now they have a binding agreement to buy this house and without the forgeries they can't do it. What happens if it doesn't happen? We will lose our deposit. And on top of that, given the current market, we may have to pay even more than that. You mean you would have to make up the difference if the house has collapsed... - Yes. -in value. -Yeah.

Yes Yes Yes. What do you think about when you tell your family what's happening here? To be very frank, we haven't told them. Because? We want them to enjoy what's left of their retired life, and if we end up borrowing all their money, or getting... to take their money to, you know, make up for this, I... I don't know how they would survive. It will be for us for the rest of our lives. While Swati and Amal look for a way out, we head to Brampton, where another newly arrived couple faces fraud. If this is. Chris and Bibi left Guyana in search of a better life with their two children.

They find this $1.3 million house. Their real estate agent, again from HomeLife/Miracle, tells them to use their mortgage brokers. He told us that he can get us a loan of between $800,000 and $1,000,000. They put down a hefty deposit of $100,000, but just before closing the deal, they are denied the mortgage. Sanjeet says a last-minute crash is sometimes a sign that a broker is taking money. There are also insidious brokers who want to push you into a private company and say, "Hey, the financing fell through, we have to go to a private company. But don't worry, I'm the hero.

I got you the money." "Well? I've had people go private and pay $50,000 to $60,000 in fees. So, there's actually more profit. Oh yeah. Sure enough, Chris and Bibi's agent leads them to a private mortgage from a surprising source On the day of closing, the real estate agent's friends tell him - will they lend you the money? - That's correct. It's a loan of $1,000,000 to save them until a bank mortgage can be arranged. At 7:00 in the afternoon we sign the mortgage contracts at the real estate agent's office. The interest on that loan? $20,000. Nothing about this scenario sounds good.

It seems that the individual seeking financing is being fed all by one person, whether the broker or the real estate agent, and everything is connected. Jennifer Fiddian-Green investigates financial crimes and has tracked the flow of illicit money to the RCMP. That's not right. I think we have... we have... we have to address this and get it out of the system. And... and we have... we have to clean it up. -We have to clean it. -If you are not the one who simply provides the documents but you say: “here is the one who makes them and I will be the one who brings them to you”, if you are facilitating that, can you wash your hands?

No, it's... it's illegal. That is a criminal activity. The impact of this crime really, in my experience, is felt by the individual families involved and changes their lives, right? That... And negatively. Negatively. For Chris and Bibi, stress alone has changed their lives. I was telling my husband that I want to go home because I'm so tired of this stress and living...living this life. Our home life is shattered. Our family life is destroyed. Our guys are really feeling it. They were once denied a bank mortgage and need one now or risk losing their hundred thousand dollar deposit.

That's when they receive a surprise call from a mortgage specialist who works at Scotiabank. She indicated that the real estate agent gave her my contact information and that she could get us the loan through Scotia, and she requested a lot of documentation. -Did you ask for anything else? -Yeah, of course. She asked for $5,000. That waits. She what she? -To-- -Prepare profiles-- Prepare profiles for us so that we can get the mortgage through the bank. Profiles with real company names, although they have no real connection to Chris and Bibi. And Chris, I'll read yours. He says that you are the operations manager employed full time at Hardwood Giant.

Yes. Is that what you do? I have never been an operations manager for Hardwood Giant. Bibi, you work full time at KK Tax Advisory. I have no idea what that is. He's like a stranger, but he has your name. -Yes it is. -It's a fake profile. It is. They alert the branch. What happens next without any explanation from Scotia makes them feel like criminals. We received letters saying we should go into Scotiabank and close our accounts as soon as possible. Immediately, yes. You know, I don't think a lot of people appreciate this because being unbanked, having your banking services taken away, is a big deal.

Its a big problem. I was so frustrated. I was trying to find out what's going on, because we've never had any problems with the law at home. Do you think the Scotiabank mortgage specialist was the one who created these profiles? Surely. In retrospect, yes. How did counterfeits get into the system of Canada's third largest bank? And we go looking for answers from the superior boss. They are breaking the law. Do you think you have a problem? We don't even promote this type of practice. ♪ ♪ This is your Market. We have discovered real estate agents offering to create fake salaries and fake tax forms.

Six in ten have already told our undercover team they will help them get a mortgage they don't qualify for. It is illegal. But now we are learning that the crime has connections within Canada's largest banks. -Should that be happening? -Absolutely not. If you're really saying, "I've got some insurers involved," then that's... that's concerning. Chris and Bibi found fake profiles on their Scotiabank account created, they believe, by a Scotiabank employee, who charged them $5,000. When we ask Scotia about their case, the bank compensates them for that questionable charge and tells us that the employee is no longer around and that they take all fraud allegations seriously.

Carl. David. - Nice to meet you. -It was really a pleasure meeting you. At Canada's largest credit bureau, the lead preventerof fraud, Karl Davies, says they are warning of possible fraud all the time. It's huge in the mortgage industry. 67% of the apps we find or that our members label as fraudulent are actually related to that type of misrepresentation. A figure that amounts to at least 16,000 potentially fraudulent applications every month. What is the disadvantage for a person who applies for something and there is fraud involved? If you are

caught

as an accomplice to that fraud, you actually run the risk of being prosecuted.

It is illegal. Fraud no matter what is illegal in Canada. Will you ever get another mortgage again? If you have a process, typically what will happen is that it will be reported in multiple places, and lenders will check those places. And so, yes, you absolutely run the risk of not being, you know, qualified for a mortgage, and potentially for other financial products as well. But most hidden

camera

officers say they're not worried. And neither should we. Remember HomeLife/Miracle? That last agent works there. This guy too. And this boy. Chris and Bibi's agent also works there.

So do Swati and Amal. The registered broker behind HomeLife/Miracle is Ajay Shah. He owns six brokerages throughout the GTA and has legal responsibility for the 3,000 real estate agents who work under his supervision. Chris and Bibi ask Mr. Shaw for help. I never received a call from him. Never. We feel like we have been deceived. Swati and Amal say they are also ignored. We will now call you to let you know what we discovered. Hello? Hello Mr. Shah, this is David Common calling from CBC Marketplace. In fact, we have documented agents who are part of your brokerage offering to facilitate mortgage fraud.

MMM. Is that something that worries you? Well, I'm definitely concerned, but two, three incidents don't even represent 1% or half a percent of the business we do. That... Well, they're... they're breaking the law. Do you think you have a problem? Of course, if someone does that part without my knowledge, I can't do anything. But we do not encourage or even promote this type of practice. What will you do if you find it? I take action, of course. We try to reach those we

caught

facilitating fraud on camera. Some say they have done nothing wrong, others do not respond.

We would like to reach out to you and show you this video. Well, let me talk to my lawyers and then I can advise you at that time. Maximum, what I can do is fire them. Because I am not the authority to take away these licenses. That's the... only repository that can work. Ajay Shah never agrees to meet in person to see the agent he caught on camera. So, we turned to RECO, the Real Estate Council of Ontario, which regulates agents. When Swati and Amal complain there, RECO says there is not enough evidence that their agent did anything wrong.

As for Chris and Bibi... They say they'll get back to us in six to eight months. Six to eight months? The regulator is based here, but he doesn't want to talk to us on camera. So, we asked them clearly why they don't do random checks on officers like we have done. They don't answer that question, but they say if there is evidence of wrongdoing, they will investigate and they say they have disciplined seven agents over five years related to mortgage fraud. Financial crimes investigator Jennifer Fiddian Green says regulators aren't doing enough. Because what's happening with these scammers is... it's not happening at a slow pace, is it?

And so we need our people on the front lines to be alert and agile so that we can respond. Until regulators step up, buyers like Swati and Amal can only hope others don't suffer. They now live in a friend's basement after abandoning their $40,000 deposit. It is a huge amount that we can lose. -Um, you know, um-- -It was that hard-earned money. They could still have to pay the $300,000 lost when the house was resold. We're also mentally preparing, uh, if we have to go back. They may have no choice but to return to India. It's... it's been hard.

It's been really hard. Mercado, we'll be right back.