Why collaboration is more important than ever in combating mortgage fraud

This article was produced in partnership with Equifax Canada.

Fergal McAlinden, of Canadian Mortgage Professional, spoke with Cherolle Prince, Equifax Canada’s head of fraud and identity management consulting, about how agents, brokers, and their clients can help identify and prevent instances of fraud.

Fraud is an ever-growing issue in Canada’s financial services sector – and it’s never been more important for mortgage professionals to remain vigilant in the fight against financial crime by staying on top of trends and furthering industry and cross-industry collaboration, according to a leading anti-fraud expert.

Cherolle Prince (pictured), head of fraud and identity management consulting at Equifax Canada, told Canadian Mortgage Professional that an increasing number of consumers were finding themselves vulnerable to fraud as a result of challenging economic times, with interest rates and financial stress both on the rise.

That’s underscored by fraud losses in Canada hitting a historic level in 2022. The Canadian Anti-Fraud Centre revealed that it received fraud and cybercrime reports totalling $530 million in victim losses last year, an increase of nearly 40% over 2021.

What’s more, only 5% to 10% of Canadians actually report fraud, the Centre estimates, meaning the huge year-over-year increase was not tied to an upsurge in fraud reporting.

“We know the problem is much larger than we’re actually seeing,” Prince explained, “and so agents and brokers need to be aware that fraudsters are sophisticated. They collaborate with each other – and one thing that’s really big, especially in this digital age, is that fraudsters have a tendency to hide behind technology.

“We’ve seen title insurance on the rise. These are fraudsters hiding behind technology knowing that it can be difficult to fully validate their identity, so they take advantage of the lack of control that organizations may have. They can go forward and continue with nefarious actions to defraud consumers and businesses.”

How can mortgage brokers, agents, and borrowers safeguard against fraud?

Canadians can request access to a free copy of their Equifax credit report in person, online, by mail or phone – meaning there’s no reason why consumers shouldn’t check to monitor for suspicious activity, Prince said.

Equifax’s website also has different tips and best practices for consumers and businesses to protect personal information, including using strong passwords, being cautious of suspicious emails and phone calls, and only sharing personal details with trusted and verified businesses and financial institutions.

The company conducts two fraud webinars a year to update attendees on current and emerging fraud trends, while also keeping its ear to the ground through consumer surveys to understand what’s happening in the fraud landscape across various verticals.

“We focus on proactively working with clients on these emerging trends to make sure that they’re investing in enhancing their fraud strategies by leveraging the latest technologies, and leveraging best practices that we see within the industry,” said Prince.

“We also recommend subscribing to our credit monitoring product which includes  things like our ID theft protection. We do have solutions that can help protect consumers and detect potential fraud by alerting them to changes that may have happened on their credit file.”

If a consumer is subscribed to Equifax’s monitoring services on their credit file, that means they can receive an alert that notifies them of unusual activity they may want to take a closer look at.

The importance of being able to spot red flags

For agents and brokers, identifying red flags or warning signs in an application is an indispensable way of being able to spot potential fraud, Prince said.

That means always verifying information, especially if the consumer has not been physically present in interactions with the mortgage professional or there have been challenges in receiving or updating documentation.

“I always say ‘trust, but verify,’” Prince said. “You want to have clarity around the source of the funds, where the down payment is from, and can you validate that? You want to trust innately that most consumers are going to be honest and they’re not trying to defraud you – but again, be careful to look out for red flags.

“In a document they’ve provided, is there something you’d want to take a closer look at? Is there information missing or misspelled? Sometimes it looks like a good statement, but there’s something a little bit off when you take a closer look.”

Rushed deals that have seen recent updates – a change in date or another individual being added to an application – may also merit further inspection.

“They may not be an indication of fraud, but it’s just something to tell you to take a closer look and ask more questions,” Prince said. “Authentication is key, verification is key, and I would even recommend re-verifying after handoff.

“When you look at the consumer journey end to end, especially when it comes to mortgages, there are different handoffs and I think at each stage between handoffs – whether broker to lender or to the lawyer – there are opportunities in each of those phases for some fraudulent behaviour to come through and if it’s not checked, it can go unnoticed.”

Communication and teamwork: the key to preventing fraud

Ultimately, effective and clear communication and teamwork across the industry – and from one sector to the other – is crucial to prevent fraud from occurring, Prince said, with all parties in the mortgage process having an important part in helping to protect clients.

“Collaboration is paramount. All of us play a role in fraud prevention and detection, especially in this economic downturn,” she said. “We all really need to be as vigilant as we can in ensuring we’re protecting consumers and businesses.”

To help Canadian organizations combat fraud, Equifax Canada developed FraudIQ Manager^TM to streamline application reviews. It’s a comprehensive fraud prevention platform, combining advanced analytics and consortium-based fraud protection into one powerful solution.

© Equifax Canada Co., 2023. All rights reserved. All marks appearing herein are trademarks or registered trademarks owned or licensed by Equifax Canada Co.

Cherolle Prince is head of fraud and identity management consulting at Equifax Canada, a multinational consumer credit reporting agency.