Equifax Asks: Would you Fib on a Mortgage Application?
September 09 2019 - 6:00AM
According to a recent Equifax survey on mortgage
fraud
, nearly 23 per cent of millennials believe
it’s acceptable to inflate your annual income when applying for a
mortgage. This is nearly double the percentage of the general
population (12 per cent) that was asked the same question.
Mortgage fraud is defined as when someone – you, a mortgage
broker or agent, a real estate agent or a lawyer – misrepresents,
lies or exaggerates information to obtain a mortgage that would not
have been granted if the truth had been told.
As with a similar Equifax survey conducted in 2014, respondents
were asked specific questions about mortgage fraud, the challenges
of buying a home, and general consumer credit knowledge. Equifax is
seeking to help consumers better understand and appreciate the
importance of having a strong credit history.
“It’s concerning that so many younger adults we surveyed believe
it’s OK to inflate their income to purchase the home they want,”
said Julie Kuzmic, Director of Consumer Advocacy at Equifax Canada.
“Fudging income numbers when completing a mortgage application is
fraud. It also becomes a slippery slope for these people who may
end up stretching themselves too thin.
“Failing to make mortgage payments in full and on time can
negatively impact your credit history and credit scores,” added
Kuzmic. “What some may see as a little white lie during the
mortgage application process could have legal consequences or
become a very hard lesson for people to learn if they cannot keep
up with their mortgage payments.”
Little White LiesWith respect to mortgage
fraud, the results of the Equifax survey showed:
- 19 per cent of millennials surveyed indicated they had not been
entirely truthful on a credit or loan application vs. 12 per cent
as a national average;
- 53 per cent of those consumers surveyed indicated mortgage
fraud is a growing problem;
- 51 per cent of surveyed respondents indicated they feel
mortgage fraud is more likely to be perpetrated by organized crime;
56 per cent of millennial respondents agreed with this statement as
did 63 per cent of respondents in Quebec, the highest of any
province;
- 16 per cent of those surveyed said they think mortgage fraud is
a victimless crime (a legal offense to which all parties consent
and no party is injured); that number was higher among millennials
surveyed at 23 per cent.
Knowing the score about creditIn addition to a
majority of respondents believing that mortgage fraud is a growing
problem, the survey also revealed that consumers are not checking
their credit scores as they are planning the mortgage application
process:
- 60 per cent survey respondents said they did not check their
credit scores before approaching a lender to secure a mortgage.
That percentage is lower than the 68 per cent who said they didn’t
do this in a similar survey conducted in 2014;
- Survey respondents who are homeowners are significantly more
likely to have checked their credit scores before securing a
mortgage, compared to 2014 (32 per cent versus 26 per
cent);
- In 2019, survey respondents were significantly more likely to
know their credit scores, compared to 2014 (40 per cent versus 23
per cent).
“Mortgage lenders examine credit scores closely, along with
other information such as your income, to determine your ability to
pay back a loan,” explained Kuzmic. “A spotty credit history isn’t
a good recipe for success to receive funding for what may be the
largest purchase you’ll make.
“It’s encouraging that more people know their credit scores
today compared to five years ago, but if a person knows their
credit scores are low, then they should take the time to establish
good credit behaviour before going to see a mortgage lender,” she
added. “This tells us that we – as an industry – have an
opportunity to educate people about the process leading up to
applying for a mortgage.”
Generally, credit scores range on a scale from 300 to 900 -- the
higher, the better. Credit scores over 660 are considered good by
most lenders. Kuzmic, however, suggests the minimum credit score
required to get approved for a mortgage is around 600 to 680
depending on the lender.
Home-buying challengesWhen asked about specific
challenges to the high cost of buying a home today, the results of
the survey showed:
- 61 per cent of consumers surveyed believe foreign investments
in real estate are the principal cause for higher home prices; 69
per cent of those surveyed who are planning to get a mortgage
believe this to be the case;
- Nearly eight in 10 or 78 per cent of consumers surveyed think
the federal government should help homebuyers in some way, with 70
per cent saying they should do more to help first-time
homebuyers;
- Slightly less than half of consumers surveyed, or 48 per cent,
say the government should relax the mortgage stress test for those
buying for the first time. Approximately 47 per cent of those
surveyed think the mortgage stress test should be relaxed for all
homebuyers, and 38 per cent of those surveyed agree that the
federal government should eliminate the stress test entirely.
The survey was conducted online using Leger’s weekly OMNI via
LegerWeb, capturing a representative sample of 1,545 Canadians from
across the country. A sample of this size would yield a margin of
error of +/- 2.5 per cent 19 times out of 20.
About EquifaxEquifax is a global data,
analytics, and technology company and believes knowledge drives
progress. The company blends unique data, analytics, and technology
with a passion for serving customers globally, to create insights
that power decisions to move people forward. Headquartered
in Atlanta, Equifax operates or has investments in 24
countries in North America, Central and South
America, Europe and the Asia Pacific region. It
is a member of Standard & Poor's (S&P) 500® Index, and its
common stock is traded on the New York Stock Exchange (NYSE) under
the symbol EFX. Equifax employs approximately 11,000 employees
worldwide. For more information, visit Equifax.ca and follow the
company’s news on Twitter and LinkedIn.
The information in this press release is published by Equifax
Canada Co. © 2019 All rights reserved. This press release is for
informational purposes only and is not legal advice and should not
be used, or interpreted, as legal advice. The information is
provided as is without any representation, warranty or guarantee of
any kind, whether express or implied. Equifax will not under any
circumstances be liable to you or to any other person for any loss
or damage arising from, connected with, or relating to the use of
this information by you or any other person. Users of this
informational publication should consult with their own lawyer for
legal advice.
Media Contacts:
Andrew FindlaterSELECT Public
Relationsafindlater@selectpr.ca(416) 659-1197 |
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