Ontario’s real estate industry is demanding action after a hidden camera investigation exposed a network of agents, mortgage brokers, and bank employees facilitating mortgage fraud in the Greater Toronto Area.
“It’s a black mark,” says Asif Khan, broker and owner of Re/Max Prime Properties in Markham, Ont. “There are a lot of questions that have been left unanswered. The main one is, how will we move forward to ensure this doesn’t happen again?”
The undercover investigation, led by journalists at CBC’s Marketplace, captured agents connecting would-be buyers with counterfeit bank records, tax documents and employment records to get them approved for mortgages they wouldn’t otherwise qualify for.
Three of the six agents caught on camera by CBC offering to assist the undercover journalists with a fraudulent mortgage application work for HomeLife Miracle Realty, which has several brokerages across the Greater Toronto Area. Real Estate Magazine reached out to the company for comment but received no response by deadline.
“This is a reflection not only on the brokerage, not only the brokerage owner but also the collective group of agents they have,” Khan says. “If they want to clean this up, they need to step up and take affirmative action to distance themselves from these individuals and prevent it from happening in the future.”
In addition to standard commissions, real estate agents told CBC’s undercover team they charged one per cent of the mortgage amount for the fraudulent application.
Submitting a fraudulent mortgage application is illegal under the Real Estate and Business Brokers Act and the Mortgage Brokerages, Lenders and Administrators Act. In a press release, the Toronto Regional Real Estate Board (TRREB) condemns the behaviour of the real estate agents caught on camera, writing, “There is no place in our profession for those who act unethically.”
TRREB is also calling on the CBC to disclose unedited footage to the Real Estate Council of Ontario (RECO) and demanding the regulator investigate, “We hereby demand that RECO commence an investigation and take decisive action and revoke the license of any real estate agent if there is proof of fraudulent behaviour.”
Ontario’s regulator responded to REM’s request for an interview with an email statement from Joseph Richer, registrar of RECO, who wrote in part, “It takes more than one party to commit mortgage fraud, so all parties have a duty to be aware of the risk of fraud and to take steps to prevent it.”
The statement adds, “We look forward to receiving any evidence CBC has uncovered supporting its allegations of illegal or unethical conduct on the part of agents and will assess the next steps to investigate possible breaches.”
Richer doesn’t commit to launching a formal investigation of the news network’s findings in his statement. However, he encourages anyone with evidence of a real estate agent facilitating mortgage fraud to file a complaint.
Time Hudak, CEO of the Ontario Real Estate Association (OREA), released a statement on Friday, saying, “OREA has consistently argued that it is too easy to get a real estate license in Ontario and too hard to lose it.” Hudak added, “(RECO) needs additional tools to investigate bad behaviour, levy heavier fines and suspend or remove licenses for egregious rule breaks.”
Agents convicted of mortgage fraud could face a fine of up to $50,000, up to two years in prison, and a suspension or revocation of their RECO registration.
Meanwhile, Asif Khan believes brokerage owners bear an immense responsibility when it comes to catching and preventing mortgage fraud. “At some point, the brokerage owners have to step up and say, ‘we’re not going to tolerate this,'” Khan adds. “It’s time for us to clean up the industry.”
With files from CBC Marketplace
Jordana is the editor of Real Estate Magazine. You can reach her by email.
The agents doing this should 100 percent have their licences revoked if found guilty, Not to mention potential the criminal charges they face. What an embarrassment to our industry. This is what greed looks like.
Agreed – ZERO tolerance
If RECO does not immediately take action to shut this down and investigate not only this situation but all others then they should seriously consider whether they are protecting either the public or the industry.
We have all know that this is going on but without RECO’s involvement nothing can be done to remove these salespeople from the industry. This problem of outright fraud as well as incompetence amongst salespeople is so rampant today that immediate action must be taken if our industry is to retain the confidence of consumers and the public.
I wonder how much $$$ they make from fees alone.
Reco has to punish the guilty, proven guilty, jail time and maybe others will think twice before committing fraud. Reco has to increase fines, charge the indivisual instead of the insurance that everyone has to pay the insurance increase every year is because of a few indivisuals, charge them.
This is unacceptable but sadly a few of my buddies have known about this for several years now as they are in the mortgage industry themselves. My nephew knew of an agent from SaveMax who offered to get him approved by someone from BMO- for only $8000. Of course he didn’t go through with it but was surprised at how easy it was to circumvent the requirements by paying three middle men- the real estate agent, the mortgage agent, and the underwriter.
Unless you’ve prodded your contacts for any extra details, and gone to Reco with as much information as possible regarding the names, companies, and suspicious activities around your ‘buddies’ stories from the minute you heard them….I’m afraid you just admitted to being the most significant (IMHO) part of the problem – complacent agents.
Please please PLEASE send RECO any and all details regarding this atrocity of which you are clearly aware, (even with details!) so we can slowly but firmly rid our industry of this garbage attitude of ‘well, rules and ethics are important, just not for me, in this situation, right now, because I/my client really need/s it and no one will notice….’ (Plus, it makes me feel cool in front of my clients and peers to know about it.)
Let’s have some accountability here folks!!
Your buddies need to come forward with the information that they have.
Maybe your buddies & nephew should also be investigated as they have known about this for several years as per your statement.
Very, very sad.
RECO also allows Real Estate Agents /Brokers to be an active Mortage Broker.
This a promoting and supporting temptation. An Agent can double end a Sale and provide the Mortage service to the Buyer.
How is this arms length duties.
Not much different than realtors assisting Appraiser in writing Appraisal Report and saying “well if we don’t the buyer won’t get the mortgage and I won’t get the sale”. New regulations and oversight is badly needed.
Not quite accruate. Real Estate Brokerages are allowed to accept finders fees but not to act as mortgage brokers and of course must disclose any finders fees to clients. RECO is clear they may not give advice on mortgages unless qualified.
I have been a real estate agent and owned a mortgage brokerage for over 30 years and there are several disclosures that must be filled out in order to do both. I also disclose to the lender that i am the listing/selling realtor and will receive a commission of X amount of dollars for the transaction. There is a right and legal way to do business and a wrong and illegal way. You can find criminals in any business, real estate and mortgages are not exempt. These guys are criminals plain and simple and do give the entire business a black eye. It took me the first 15 years in business to convince people that mortgage brokers are an integral part of the business so reading this puts us back 5 years.
In 2008 mortgage fraud destroyed the American housing market and almost collapsed their financial system – greed and hunger are prime fuel sources for criminal activity as it is easy to justify in your mind that your actions to help your client are not really hurting anyone – for desperate buyers and home owners in need there are always sharks out there which will work the system – with the increase in mortgage rates and increasing qualification restrictions the solution has to be in the banking system doing its due diligence ! RECO can increase its enforcement but till an agent is convicted -which will mean they must deal with a criminal charge and a judge – everyone has to be deemed innocent.
It is far simplistic ti legislate that kick backs and illegal finder fees are criminal and let CRA mail them in audits and report them to the police.
Then RECO can kick them out !
Reco needs to grow a set and ban these Agents for life.
Banks need to drain the swamp of their corrupt mortgage agents and underwriters!
Way to go CBC. Now do the same thing to Trudeau and the rest of the politicians ripping us off in our Country.
Amen!
And do check out the imbecile conservatives especially pollivere
What about the home owners who paid real estate/ mortgage agents to get approved? What will happen to them? Asking for a friend..
They should be punished too because I’m sure that they were aware in the first place, we all know that in order to get qualified you should have a sufficient income and down payment plus good credit score and employment history etc. we purchased 2 houses already that’s why I’m aware of the process.
$50 says this was in the news because someone got upset their attempt to obtain mortgage fraudulently failed.
The whistleblower must have been a potential Buyer who was promised mortgage approval but didn’t get it for one reason or another.
These low life’s make the entire industry look bad. Time to clip their wings and revoke the licence.
The problem with the Real Estate Profession is The Broker of Record has lost control or given up the control of Theirs Real Estate practice.
you could be right or they defaulted on the Mortgage Payment because of intrest rate change.
Why not they did not find anything in Calgary Alberta too . We sure they will find anything Alberta too
What about the rest three, why their names and their brokerage name was not disclosed by CBC or it was targeted?
The Agents involved can get away with this because our law is very linient and why the sign for sale comes up the listing coming on MLS an when you request a showg it is not permitted means the Agents should not be allowed to sell their own listings and these found a way to get an othere agent for Buyer and Pay him a frection of the Commission,Most o the listings are sold even before they hit the Market.
Convicted fraudsters should be banned for life from the all activivities in the financial sector…no second and third chances.
Why are we surprised?
Not quite accruate. Real Estate Brokerages in Ontario are allowed to accept finders fees but not to act as mortgage brokers and of course must disclose any finders fees to clients. RECO is clear they may not give advice on mortgages unless qualified.
If the agents are found guilty, there is no question that they should lose their license. No question at all. What to hell is RECO for if not.
There are agents in Ottawa does the same! RECO needs to grow some balls! These agents are the main issue for property prices to go up.
These agents in Ottawa are helping new comers to Canada (ie: 1-2 months in Canada) buy their first home (how?), forging all documents, including CRA NOA! They must be caught!
By doing this, it’s really not helping the hardworking Canadians who are trying to buy their first home!
Calling yourself anonymous and making accusations does very little for our industry. Why don’t you grow a pair and if you have some real information , come forward for the betterment of the industry. Otherwise you are implying that this type of behavior is rampant in our industry already .
He’s not lying though. My realtor here in Toronto tried to convince me is the way to go. When I decided not to, the mortgage broker decided against doing an approval which I am quite fine with. Why don’t you grow some balls and not try attacking someone who is trying to bring things to light.
Nothing will ever be done cause it’s RECO