The Canada Revenue Agency (CRA) will soon launch a new income-verification tool to help combat mortgage fraud.
That’s according to the latest update in the federal government’s 2024 Fall Economic Statement.
Mortgage fraud is also known as “application fraud” and occurs when individuals falsify the information on their mortgage application. Someone else may also try to falsify documents on the applicants’ behalf or encourage them to do so.
The federal government states that committing this type of fraud can affect one’s ability to obtain a mortgage or credit in the future.
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The fall fiscal plan highlights that the CRA has been “actively consulting” with international tax administration partners and experts in the IT, privacy, security, and legal fields.
These consultations aim to identify options that would help financial institutions find solutions and options to detect and stop fraud in a secure, user-friendly manner that works with the CRA’s systems.
The fall economic statement added that the CRA had expanded its outreach to include experts in the broader financial sector, such as mortgage lenders, in designing and implementing its new tool.
The CRA says the implementation of measures is expected in early 2025.
Mortgage fraud in Canada
Mortgage fraud in Canada has been on a downward trend, according to reports from Equifax Canada.
In February 2024, the credit bureau’s quarterly data indicated that fraud rates in mortgage applications increased by 9.9% in Q4 compared to Q4 2022.
“With consumers facing a difficult mortgage market and continued economic headwinds, we may see an increase in mortgage fraud,” stated Carl Davies, head of fraud and identity for Equifax Canada, in a statement at the time.
However, a September 2024 report from Equifax Canada indicates that mortgage fraud rates have decreased compared to the same period in 2023, dropping by 16.3% year over year.
The September report stated that Alberta was the only province where application fraud was rising, “often involving falsified income and employment documentation. ”
Daily Hive has contacted the CRA for more information about its tool and will update this article when the agency responds.