Mortgage Fraud: Red Flags for Appraisers

The Real Estate Council of Alberta (RECA) - Mortgage fraud is increasingly widespread and complex and its consequences can be devastating. It is a criminal offence, and in Alberta several individuals have been charged with mortgage fraud by the RCMP. Participation in mortgage fraud is contrary to the Real Estate Act Rules, and industry members who breach the Rules face strong sanctions, including suspension or cancellation of their authorization.
All industry professionals – whether they are appraisers, real estate associates, or mortgage brokers – must play an active role in preventing mortgage fraud by identifying suspicious deals, notifying the authorities, and assisting in investigation of parties involved. The following information is designed to assist real estate appraisers in identifying suspicious transactions connected to trades in real estate.

What Are Red Flags?
1. The person requests that the appraiser complete appraisals in an unfamiliar market area.
2. The person indicates the property value expected.
3. The person requesting the appraisal claims they own the property, but the title is in another name. (Identity fraud can occur when an individual falsely claims ownership, obtains a mortgage, and then leaves.)
4. The person tries to influence the appraiser with the promise of additional work if the current appraisal value(s) meet their expectations.
5. The person requesting the appraisal has approached other appraisers and is not satisfied with their values.
6. The person requests that the appraiser keep everything confidential and not approach others involved in the transaction for information.
7. The person does not intend to move into the property when a high-ratio mortgage will likely be sought.
8. The person does not provide information requested (leases, expense information, financial statements, etc.) and indicates it is misplaced, lost or with someone who is away (accountant, lawyer, etc.) and therefore cannot be obtained.
9. The person is using a financial institution with offices in a different city.
10. The person provides poorly executed documentation regarding listings, sales, leases, etc. (may be only partially completed
For more information and more red flags visit: http://www.reca.ca/industry_standards/practice_tips/red_flags_app.htm 

Posted by Joe Samson

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