We've had a bunch of straw buyers come through our doors over the past couple years after the house of cards came crashing down. These kinds of schemes are not limited to BMO by any means.
Many times the straw buyers are young and enticed by the opportunity to make a few thousand dollars for little to no work. "We put the house in your name, help you qualify for a mortgage (make up job references and income information, if necessary). We'll make the payments on the mortgage for 6 months and then sell the property. You get your payment, we get our increase in value. It's all good."
It's not a grey area or favour so much as it is an outright misrepresentation. You obtain title and the mortgage by misrepresenting some or all of the following: your income, your employment history, the source of your downpayment (if any), your intention to take possession of the home, your intention to use it as your principal residence, your intention to not use the property as a source of revenue. Without fudging some or all of this stuff, you aren't going to get title and you are not going to be granted a mortgage.
The mortgage payments are often not made, the mortgage goes in to foreclosure and the straw buyer is left on the hook often personally liable for the deficiency.
The scam has been around for a long time. I suspect when housing prices were rising rapidly several years ago, the scammers probably really did sell the properties in order to realize that profit as well (rather than let the mortgage go into foreclosure). When the market tanked, there was no incentive to actually sell the property. As more of these straw buyers found themselves in foreclosure proceedings, the incidence or likelihood of their reporting the circumstances of the scheme to the authorities likely went up.
In my experience, the police have always been reluctant to investigate these frauds. Often times we will hear "This is a civil matter, take it up with the courts."
|