The Bank of Montreal estimates it may lose as much as $30 million on a mortgage scheme that involved some of its own employees. The bank is suing a few hundred people including four of its own employees, along with mortgage brokers and, so far, seventeen lawyers in what they allege is one of the largest cases of mortgage fraud in Canadian history.
The Bank of Montreal says its securities department first noticed irregularities in several of their Western Canada mortgages back in 2006. This prompted the bank to hire a forensic accounting firm who spent the next year digging through the details to uncover what was really going on.
The forensic accounting firm realized a rather sophisticated scheme where scammers would chose the worst house in a preferred, established neighbourhood. They would then convince the bank the house was worth much more than it really was due to it’s location, and being as banks rely on software programs to determine house values, the banks would concur. The scammers would then purchase the house and pocket the difference.
To qualify for the mortgages, these scammers were paying unsuspecting people, generally new immigrants $2,000 to $8,000 for the use of their name on the mortgage. Lawyers would then step in and draw up fake documents of earnings, often showing inflated wages and high net incomes to ensure the immigrants would qualify for the mortgages. The legal documents filed by the bank shows the fraud scheme was operated by 14 inter-connected groups that generated approximately $140 million of which $70 million was in fake mortgages.
The Bank of Montreal’s documents also showed that millions of the fraudulent money was sent to countries such as India, United Arab Emirates, Lebanon Pakistan and Saudi Arabia. They also noted that in one instance alone, a home in Calgary that was bought for $900,000 was sold three years later for $2.3 million, netting the scammers a whopping $1.4 million.
A Calgary based management company had documents unravelled by the Bank of Montreal investigators showing 150 suspected counts of mortgage fraud within 16 different financial institutions. The investigators felt this was a clear sign of how inefficient the controls are in the banking system. If you have been the victim of fraud and have had your finances affected because of it, you might want to consider a consolidation loan. If your credit rating has been affected, you still have options to repair your credit and consolidate debts. A car title loan may help get your credit and your finances back on track.