What to Do When You Were Advised to Lie on Mortgage Applications

When dealing with complex matters like mortgage applications, most people defer to professionals who have a complete and in-depth understanding of the nuances involved with loans and real estate transactions. In some situations, when getting the ideal mortgage does not look possible, a lender, broker, or real estate professional may suggest you inflate your income, hide debts, or misrepresent your financial status or property details on a mortgage application to improve your chances of approval. 

This may seem like advice from a trusted expert, especially if they provide you with assurances. However, misrepresenting your personal or property information on a mortgage application is considered mortgage fraud, which is considered a serious offence in Ontario. If you have followed the advice of a professional and filled out a mortgage application incorrectly on purpose, talk to a fraud lawyer for legal advice, as the offence could result in civil and criminal penalties. 

Safeguard your financial and legal interests. Book a consultation with our team of criminal and civil litigation lawyers at Karrass Law. 

To learn more about how to respond legally when you were advised to lie on a mortgage application. 

The Effects of Lying on a Mortgage Application

A mortgage application requires you to provide honest and accurate financial details, including your income, employment, existing debts, and assets. Banks and lenders use this information to assess whether you can afford the loan and determine what interest rate and terms you qualify for.

If you knowingly provide false or misleading information, you could be committing fraud under Section 380(1) of the Criminal Code of Canada.

The penalties for mortgage fraud can be severe, including:

• Criminal Charges: Fraud over $5,000 can result in up to 14 years in prison.
• Civil Liability: If a lender suffers financial losses due to a fraudulent mortgage, they may take legal action against the borrower to recover damages. A civil litigation lawyer can assist in defending against such claims.
• Foreclosure and Financial Losses: If the fraud is discovered, the lender can revoke the mortgage and demand your immediate repayment. If you are unable to pay, you may face foreclosure and damage to your credit.

Even if you were pressured or misled into providing false information, the legal consequences still apply. To protect your best interests and get the best results possible for your case, talk to our skilled litigation and defence lawyers.

What to Do If You Were Advised to Lie on a Mortgage Application

If a mortgage broker, banker, or real estate professional advises you to misrepresent financial information, you need to take proactive steps to protect yourself legally and financially. Being aware of how you can be implicated in mortgage fraud can help minimize your vulnerability. If a professional has advised you to lie, here’s what you should know:

Do Not Follow Their Advice

The first and most important step is not to lie on your mortgage application. Even if you are told it’s “common practice” or “no big deal,” you may still be held legally responsible if the fraud is detected. If you’re not sure if the advice you’re being given is sound, get a second opinion from others in the industry. 

Document the Advice Given to You

If a mortgage professional advises you to falsify information, keep a written record of your interactions. In some cases, instances where you’re being advised to lie can be considered professional negligence. Proof such as emails or text messages, notes, documents, or other proof of communication can help support your fraud cases while also supporting a case of professional negligence against the person who advised you. 

Mortgage brokers and financial advisors have a duty of care to provide ethical and lawful advice. Encouraging a client to misrepresent financial details on a mortgage application may be a breach of this duty. At Karrass Law, our experienced civil litigation lawyers can help you file negligence claims where applicable. 

To learn more about your legal options and rights, talk to Robert Karrass and the Karrass Law team. 

File a Complaint with Financial Authorities

If you believe a mortgage broker or financial advisor acted negligently by advising you to commit fraud, you file a complaint with the Financial Services Regulatory Authority of Ontario (FSRAO). You can also explore pursuing a civil lawsuit for any damages they may have cost you. To find out if you have a viable case, talk to our civil lawyers near you. 

Seek Legal Advice with Defence Lawyers at Karrass Law

If you have already submitted a mortgage application containing false information, whether you did so knowingly or unknowingly, consult a lawyer for mortgage fraud as soon as possible. A skilled, experienced, and reliable civil litigation and fraud defence lawyer can advise you on how to manage the situation in your best interests. Our team is committed to providing our clients with robust representation, from zealous arguments to personalized legal advice.

To learn more about how our team of legal experts and lawyers can help you, book a consultation.