Canada’s overheated housing market worries the country’s housing watchdog as they believe many borrowers overstated their income.
The Canada Mortgage and Housing Corporation (CMHC) action plan, obtained by Reuters under public records laws, shows the agency is concerned about systemic risk posed by mortgage fraud. The agency has said repeatedly that there is little evidence of widespread fraud in Canada, but it also says data are limited.
“The industry’s current detection tools have not kept pace with the increasing sophistication of threat we face,” says the plan, adding that paperless transactions, pressure to close deals quickly, rising prices and new regulations “create strong incentives for individuals or mortgage professionals to engage in opportunistic — or criminal — fraud.”
The documents describe several other initiatives, including the roll out of Citadel, software from Equifax that flags high-risk mortgage applications.
One issue flagged in the CMHC plan is the Canada Revenue Agency’s website, where taxpayers can print a copy of their notice of assessment, showing reported income. The report says the notice of assessment is “easily falsified.”
“The CRA is currently exploring different avenues in which to improve how it delivers taxpayer specific information in a secure manner, including the feasibility of securely sharing tax information with financial institutions upon client consent,” the tax agency said in an emailed statement.