The Canadian Bankers Association is seeking electronic access to confidential federal tax records to verify borrowers income.In their submission to the Senate Banking committee, the Association asserted the measure would reduce costs.“This would allow banks to reduce mortgage fraud that serves to drive up costs for borrowers,” testified Alex Ciappara, chief economist with the Bankers Association. He did not elaborate.According to Blacklock’s Reporter, the Association stated the proposal would involve the Canada Revenue Agency disclosing confidential data from borrowers T1 annual tax returns, specifically from line 15000, which provides information about gross income.“That can be a technology-based solution to reduce mortgage fraud and thus help with mortgage costs,” said Ciappara.“If we have consent from the taxpayer, we can ask Canada Revenue Agency for the income number to put into the mortgage application to improve the process in terms of obtaining a mortgage, to reduce costs,” said Ciappara. He did not detail cost savings or explain why current checks on borrowers’ Notices of Reassessment were insufficient.In a separate submission to the Commons Finance committee, Mortgage Professionals Canada also requested electronic access to confidential records.“A digital income verification tool is an urgently required fraud prevention solution,” it wrote.“Fraud hurts consumers, undermines Canada’s reputation and ultimately impacts investment,” wrote mortgage brokers. They did not detail the extent of the fraud.Mortgage Professionals said “increased instances of title and mortgage fraud in the Greater Toronto Area and BC and of money laundering in real estate transactions.” No figures were provided. “The broader prevalence of artificial intelligence has also allowed for fraudsters to replicate documents more easily,” it wrote.A 2004 report from the Canada Mortgage and Housing Corporation showed fraud as infrequent but financially costly when it did take place.“Fraud in land conveyancing does not appear to have reached crisis proportions in Canada,” said the Report in Land Title Conveyance Practices and Fraud. “The general historical pattern of title fraud is there are generally few cases, but those cases which do occur cause considerable loss.”Ben Rabidoux, housing analyst with Edge Realty Analytics Ltd. of Owen Sound, ON, told the Commons Finance committee on September 21 some reform was needed. “We have a problem with mortgage fraud in Canada,” said Rabidoux.“There is a simple, elegant solution here. Streamline direct income verification between lenders and the Canada Revenue Agency.”“It’s just a simple yes or no verifying on Line 15000 on the Notice Of Assessment,” said Rabidoux. “It’s been live in the United States for 20 years. There is no reason we can’t verify income directly from the Canada Revenue Agency. The mortgage industry is begging for it. When an industry is begging for regulation to weed out bad actors, we should listen to them.”
