Mortgage crime is a multi-headed hydra that spans flipping, fake identities, and money laundering
Massively organized crime is behind an estimated 90% of mortgage fraud in Canada, according to former RCMP top investigator Henry Tso.
Tso, who previously served as the superintendent in charge of RCMP’s federal organized crime and financial integrity team in BC, warned that savvy criminal ventures are taking advantage of elevated prices in hot housing markets like Toronto and Vancouver.
Among the most nefarious of these organizations’ schemes is property flipping that incorporates buyers and sellers working in conspiracy to acquire properties that would otherwise have gone to legitimate market players.
“Illegal property flipping involves repeatedly and fraudulently selling a property between colluding individuals,” Tso stated in an interview with Global News.
Under this strategy, homes change hands between these criminals several times over a short duration, with each transaction commanding a progressively higher value.
Such properties are eventually purchased by “straw buyers,” entities using stolen or fake identities. Aside from depriving the market of supply, this further aggravates the already out-of-control growth of housing costs.
“The price is artificially driven up through false appraisals or subsequent sales between colluding individuals.”
Tso added that many of these homes are used for laundering dirty money from fraud and drug trafficking, underscoring the tenacity of this multi-faceted crime hydra and ultimately harming Canada’s financial safeguards system.
“The ‘straw buyer’ intends to let the property default and be untraceable to the financial institution,” Tso explained. “As the price is artificially inflated, the loss to financial institutions can be significant.”
