In its third-quarter fraud trend report, Equifax said the mortgage fraud rate fell by about 10 basis points year-on-year, accounting for 0.19% of applications, reflecting a slowdown in housing demand and a decrease in the number of applications.
But despite a slight decline in mortgage-specific cases, the overall fraud rate across industries has climbed to its highest level in four years, partly due to a surge in first-party fraud.
Financial misrepresentation remains the main risk in mortgages, accounting for more than three-quarters of the cases found, an increase of 8% from a year ago.
Cherolle Prince, director of fraud consulting at Equifax, warned that even if the total amount of mortgage fraud activity has dropped, “lenders should focus on verifying all documents, especially financial documents.”
As mortgage fraud turns, false statements dominate
Forged income and forged documents remain the main cause of most mortgage fraud cases, according to Equifax. Employment letters, payrolls, bank statements, tax statements and down payment verification materials are the most commonly rigged documents.
“More than 76% of fraudulent applications contain some form of financial misrepresentation,” Prince said. “We also see account abuse increases with the increase in forgery revenue.”
The report also points to obvious regional differences. The fraud rate has declined nationwide, but mortgage fraud rates remain the highest in Ontario, Alberta and Quebec. By contrast, British Columbia has improved after it has previously been among the top provinces of fraud.
Equifax attributed the decline in part to a decrease in overall activity in the real estate market, which reduced the number of applications and thus reduced the chances of fraudulent submissions. But the company warns that the calm could be temporary, with a trend of misrepresentation that fraudsters are adapting rather than retreating.
New verification challenges in loans
Despite the decline in total interest rates, Equifax data shows that mortgage fraud is becoming increasingly concentrated among certain borrowers.
For example, the incidence of income and documented misrepresentation among first-time home buyers and non-mortgage holders continues to be higher, suggesting that affordability pressures may prompt some to misrepresent the facts to qualify.
Equifax also continues to see a wider fraud ecosystem evolving, including synthetic identity fraud (often involving “thin files” constructed from fabricated personal data) and real identity fraud (increasingly targeting people with credit scores over 700). Prince said AI tools are now being used for “scale identity fraud attacks”, an issue that is increasingly worrying as lenders rely more on digital verification.
As mentioned earlier, first-party fraud continues to rise and is now at its highest level since 2021, although third-party fraud has declined slightly. Equifax added that payment-related fraud, including deposit and hot money fraud, is also increasing, especially in the banking and telecommunications sectors.
For mortgage lenders, a reduction in cases does not mean a lower risk. Prince stressed the need for enhanced document checks to ensure safeguards do not relax as the number drops.
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Cherolle Prince Equifax Canada Fraud Trend Report Mortgage Fraud Steven Brennan Webinar
Last modified: October 7, 2025
