A Review of Trends and Prevention Strategies for Mortgage Income Fraud in the Canadian Market


Nitya Yeldandi, Royal Roads University

This research critically examines the pervasive issue of mortgage income fraud within the Canadian mortgage market, delving into its prevalence, root causes, consequences, and preventive strategies. The Canadian mortgage market, integral to the nations economic stability, faces a significant threat from mortgage income fraud, which disrupts the housing sector, erodes consumer trust, and challenges the foundations of the financial ecosystem. This qualitative research explores trends and strategies to prevent mortgage income fraud in the Canadian market, aiming to enhance the Canadian mortgage industrys effectiveness. Employing primary research methods, including interviews with diverse subject matter experts (SMEs) and an extensive literature review, the study focuses on understanding financial implications, risk management, and mitigation strategies related to income fraud. Purposive and snowball sampling techniques ensured a comprehensive participant pool, addressing challenges through informed consent and voluntary participation. Semi-structured interviews, guided by open-ended questions, provided nuanced insights. Thematic analysis identified common themes, merging expert interviews and literature review for a holistic understanding of Canadian mortgage income fraud. While acknowledging potential limitations, the methodology strives to equip stakeholders with a nuanced understanding of enhancing efficiency, reducing risk, and improving the customer experience in the Canadian mortgage industry. This research analyzes trends and prevention strategies for mortgage income fraud in Canada to combat fraudulent activity and protect the mortgage industrys integrity. This research project seeks to analyze the trends and prevention strat-egies related to mortgage income fraud in the Canadian market, to provide insights and recommendations to combat this fraudulent activity and safeguard the integrity of the mort-gage industry. : How can the Canadian mortgage sector effectively combat income fraud in mortgage applications while ensuring a secure lending process and preserving the legitimacy of financial transactions? Sub-questions: What are Canadian mortgage applications most common income deception types and patterns? Which main elements lead to income fraud in mortgage applications? What prevention techniques do Canadian financial institutions and regulatory organiza-tions currently use to lessen the risks of income fraud in the mortgage sector? How successful are the preventative techniques currently employed in identifying and stopping income fraud in mortgage applications? What prospective advancements and innovative strategies might be used to better identi-fy and stop income fraud in the Canadian mortgage market? This paper highlights the negative consequences of income fraud within the mortgage industry and recommends urgent action to combat it. The paper suggests a comprehensive strategy involving advanced technology, employee training, and a robust corporate governance framework. Advanced AI algorithms can scrutinize vast datasets for early indicators of fraudulent activities, while dynamic and responsive training programs can empower staff in identifying fraud and implementing preventive measures. The adoption of the outlined principles is positioned as a significant step toward cultivating a more secure and trustworthy mortgage industry. This paper holds substantial relevance to the overarching theme of the session and the CSA Conference as a whole. The theme, presumably related to financial systems, security, or risk management, aligns seamlessly with the researchs focus on income fraud within the mortgage industry. By addressing a critical issue with far-reaching implications for borrowers and the financial sector, the paper directly contributes to the broader conversation on ensuring the integrity and security of financial transactions. The presentation of innovative strategies, including advanced technology and employee training, positions the research as a valuable contribution to the conferences exploration of contemporary solutions within the financial landscape. The emphasis on cutting-edge technology and its application in fraud prevention, as evidenced by studies from various researchers, resonates with the conferences likely interest in staying abreast of the latest developments in the field. Furthermore, the collective responsibility advocated in the conclusion aligns with the collaborative spirit often emphasized in conferences like CSA. The paper implies that addressing income fraud requires a concerted effort from policymakers, financial institutions, and other stakeholders, fostering a sense of community and shared responsibility. In summary, this research paper substantively contributes to the conference theme by addressing a pertinent issue, presenting innovative solutions, and advocating for collective action, thereby enriching the dialogue on financial security and integrity.

Non-presenting author: Mark Lokanan, Royal Roads University

This paper will be presented at the following session: