The CRA held roundtables in late 2024 with mortgage trade associations, together with banks, credit score unions, insurers, brokers and different lenders, and acquired over 1,600 responses to an internet questionnaire. This follows the federal authorities’s pledge in Price range 2024 to discover a CRA-led revenue verification device as a method to crack down on mortgage fraud.
Contributors persistently voiced concern about rising fraud, particularly the usage of faux or altered paperwork to inflate revenue.
“Contributors had been clear {that a} device created by the CRA that enables mortgage professionals to confirm the validity of a borrower’s revenue would streamline the mortgage approval course of and scale back the dangers of fraud considerably,” the CRA stated in its report.
Business needs real-time information, not sure/no solutions
Sixty-nine per cent of trade members surveyed stated they’re conscious of fraud traits within the mortgage area, citing falsified documentation as probably the most urgent subject. Different issues included laundering funds by mortgage transactions, overstating revenue to qualify for bigger loans, and fraud occurring from throughout the trade itself.
Lenders and brokers at the moment confirm revenue utilizing a number of sources, together with employment letters, financial institution statements, and CRA-issued tax paperwork. Among the many mostly requested paperwork are T4 slips, notices of evaluation, and proof of revenue statements. Some additionally request the borrower’s full T1 tax return, notably when self-employment or rental revenue is concerned.
“Contributors confirmed that the present revenue verification course of requires that brokers, lenders, underwriters, and insurers take a number of steps to confirm a borrower’s identification and paperwork,” the report stated.
The CRA famous that the majority trade professionals need entry to real-time revenue information by an API or safe CRA portal, built-in with mortgage origination platforms. This, they stated, would enable professionals to retrieve verified revenue info with the borrower’s consent, rushing up transactions and lowering handbook processing.
Based on the CRA, “The commonest suggestion was to make use of a brand new or present CRA portal that may enable mortgage professionals to acquire info with the borrower’s authorization.” Contributors additionally careworn the necessity for a digital device that aligns with the tempo of mortgage origination, including, “The response from the device must be offered in real-time to be per the trade’s digital options and velocity of transactions.”
Many within the trade stated a easy “sure” or “no” from the CRA wouldn’t reduce it. Practically half of respondents (47%) felt that form of response wouldn’t give them the small print they should correctly assess a borrower’s revenue.
“Contributors defined {that a} sure/no validation of revenue can be inadequate as a result of it lacks the element required to adequately confirm paperwork and have a full view of a borrower’s monetary state of affairs,” the report famous. Lenders additionally want to know which sources contributed to complete revenue, equivalent to employment, enterprise revenue, or authorities transfers, and whether or not the borrower has excellent money owed to the CRA.
CRA survey information exhibits that 84% of trade respondents stated they would wish a borrower’s complete revenue (Line 15000), whereas 74% cited identify, 62% web revenue (Line 23600), and 54% taxable revenue (Line 26000) as minimal necessities.
Some contributors warned that even small inconsistencies might set off a false “no” response. “The implications of a false destructive could possibly be impactful,” the CRA stated, including that delays might jeopardize a house buy and injury the connection between borrower and dealer.
Fraud prices excessive; assist for paid mannequin grows
Most contributors stated the device ought to present a minimum of two years of revenue historical past, with some suggesting as much as 5 years, particularly for debtors with variable or self-employment revenue. In addition they emphasised the significance of safety safeguards, together with two-factor authentication, borrower notifications, and audit mechanisms to detect unauthorized entry.
To make sure accessibility, contributors stated the CRA should additionally contemplate debtors with out on-line accounts or who reside in rural areas. “The device’s accessibility ought to contemplate monetary establishments with restricted assets,” the report added, noting that smaller lenders could not be capable of combine instantly and will require a standalone interface.
The CRA additionally explored value and adoption points. Based on the report, “As famous by Mortgage Professionals Canada, ‘for each $1 misplaced to fraud it takes $4 for lenders to recoup.’”
A number of contributors stated they already pay for third-party providers and can be keen to contribute to the price of a CRA device, whether or not by a subscription, pay-per-use mannequin, or annual entry price.
Whereas some stated they might not rely solely on CRA validation, preferring to proceed verifying employment and supporting paperwork, they agreed {that a} centralized revenue verification system would grow to be a broadly used device, particularly if it might affirm the authenticity of tax paperwork and scale back turnaround instances.
“The CRA has fastidiously reviewed contributors’ suggestions and can use it to tell choices on the potential design and implementation of a brand new device,” the company stated. It additionally plans to listen to from debtors subsequent to ensure their wants and issues are a part of the method.
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Final modified: July 15, 2025