We came across a mortgage customer this week who decided it was a good idea to change the date on his job letter. Apparently it was old and he didn’t want to ask his employer for a new one.
Sure enough, the lender called his employer’s HR department to validate the job letter and sure enough, the lender asked the employer to confirm the date it was issued, among other things.
When the employer stated a different date than the date on the job letter, the lender caught it immediately. The client’s mortgage application was immediately declined.
“I didn’t think it was a big deal,” the borrower told his broker, unashamedly.
But it was a big deal. It was fraud.
The minority of people who perpetrate these frauds think their “white lies” won’t be discovered, but they’re wrong, they routinely are noticed.
And lenders can be obligated to report them when they’re found. In some cases, that can block the offending borrower from getting a mortgage elsewhere, particularly if they seek default-insured financing.
Doctoring documents is not only illegal, it’s fruitless…i.e., not worth it. But that doesn’t stop people.
An Equifax survey last year found that 12% of Canadians admitted to providing false information on a credit/loan application. And 16% considered it a victimless crime. Both numbers were materially higher for millennials.
Mini-frauds like this happen all the time in the mortgage industry because enforcement is lax. Authorities don’t prioritize “fraud for shelter” cases so there are no prosecutions and no deterrent effect. That’s a major reason why fraud keeps growing (in absolute numbers) despite increasingly sophisticated lender technology to spot it.
Hopefully 99% of people reading this would never attempt such deception. For those in the 1%, here’s some advice: Don’t be a short-sighted document cheat, not if you actually want to get the loan you seek.