Real Estate Council of Alberta Fundamentals Practice Exam

In the context of real estate fraud, what distinguishes fraud for housing from fraud for profit?

1. Fraud for housing involves organized crime, while fraud for profit does not

2. Fraud for housing includes exaggerated income claims, while fraud for profit involves less documentation

3. Fraud for housing is committed by individuals seeking larger mortgages; fraud for profit often involves organized crime

4. Fraud for profit requires fewer legal implications than fraud for housing

The correct answer is: Fraud for housing is committed by individuals seeking larger mortgages; fraud for profit often involves organized crime

Fraud for housing is characterized by individuals attempting to secure mortgages that are larger than what their financial situations would normally allow. This type of fraud typically occurs when someone exaggerates their income or misrepresents their financial capabilities to obtain housing. The main goal here is to secure a roof over their heads, which is fundamentally different from fraud for profit. Fraud for profit, on the other hand, often involves organized crime and systematic schemes where the perpetrator seeks financial gain by manipulating the real estate market. These operations may involve multiple properties, extensive documentation forgery, and large-scale fraudulent activities. The distinction lies in the motivation: fraud for housing is primarily driven by personal need, whereas fraud for profit seeks to exploit the market for financial gain, typically at a larger, more organized level. This important distinction helps in understanding the dynamics and implications associated with each type of fraud in real estate, leading to better identification and prevention strategies against these crimes.