Honesty remains the best policy when purchasing a home
TORONTO, Sept. 09, 2019 (GLOBE NEWSWIRE) -- 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 Lies
With 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 credit
In 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.
When 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.
Equifax 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.
|Andrew Findlater |
SELECT Public Relations