Mortgage Broker Suspensions Means Change for Borrowers
Home Capital Group, a Canadian mortgage lending company, recently suspended 45 brokers accused of committing fraud on mortgage applications. Allegations included falsifying income information on applications to ensure acceptance for harder to approve clients.
Some individuals faced challenges when qualifying for a mortgage and grew desperate for other options. Their mortgage brokers, self-employed professionals reliant on commissions, may have allegedly misrepresented income numbers to ensure their clients' success and a payday for themselves at the end of the process. Home Capital Group stated there was no evidence that their staff or brokers were actively involved in the fraudulent reporting of income.
“The problems occurred when borrowers’ employment letters were altered to inflate incomes, in some cases showing that the borrower was making $84,000 instead of $64,000.”
Since the suspensions, Home Capital Group has reported changes to their mortgage application process. This included hiring a specialized team to independently verify a borrower’s income statements. Brokers have been calling for tougher restrictions for the industry, stating that integrity needs to be a priority for their field.
Brokers argued for tougher course requirements and the introduction of ethics training for entry into the industry. They also lobbied for harsher penalties for brokers who committed fraud and holding applicants responsible who corroborated the false information
Despite the recent setbacks, mortgage brokers remain an important option for people seeking choice in lenders. Mortgage brokers can shop around applications to several institutions for the most competitive rate while a traditional bank only offers their inhouse rate. They empower borrowers to take control of their mortgage application and they are here to stay.
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