Mortgage Fraud: This crime typically hurts financial institutions the most. It’s when someone intentionally provides false information to obtain a mortgage they normally wouldn’t have gotten.
The most common type of mortgage fraud involves a fraudster obtaining a property and then increasing its value through a series of sales and resales involving the fraudster and someone working in cooperation with them.
A mortgage is then secured for the property based on the inflated price.
Title Fraud : This crime typically hurts individual homeowners the most. This is when a fraudster assumes the identity of a homeowner to transfer the title of their home, sell or obtain a mortgage on the property.
How you can protect yourself from becoming a victim of real estate fraud , courtesy of the Canadian Bankers Association :
- Protect your personal information from identity thieves:
- Do not give out personal information on the phone, through mail or over the Internet unless you have initiated the contact or know with whom you’re dealing.
- If it sounds too good to be true, it probably is – before you reveal any personal information, find out how it will be used and if it will be shared.
- Pay attention to your billing cycles. Follow up with creditors if your bills don’t arrive on time.
- Guard your mail. Deposit outgoing mail in post office collection boxes or at your local post office. Promptly remove mail from your mailbox after delivery. Ensure mail is forwarded or re-routed if you move or change your mailing address.
- Minimize the identification information and number of cards you carry.
- Keep items with personal information in a safe place. An identity thief will pick through your garbage or recycling bins. Be sure to tear or shred receipts, copies of credit applications, insurance forms, physician statements and credit offers you get in the mail.
- Give your Social Insurance Number (SIN) only when absolutely necessary. Ask to use other types of identification when possible.
- Don’t carry your SIN card; leave it in a secure place.
- Check your credit report regularly to ensure there are no discrepancies
- Reviewing your credit report can help you find out if someone has opened unauthorized financial accounts in your name. There are three credit reporting agencies in Canada: Equifax Canada, Northern Credit Bureaus Inc. and TransUnion Canada. You can request free copies of your credit report from credit reporting agencies by mail. Online versions of reports are also available for a small fee.
- You can also conduct a property search at your province land registry office to ensure that the title to your home is in your name.
Here are some more tips to protect yourself:
- Consult public real estate websites to review property listings in the community where the property is located. Compare features, size and locations to establish if the asking price seems reasonable.
- Check to make sure your representative is a licensed real estate agent.
- Beware of a real estate agent or mortgage broker who has a financial interest in the transaction.
- Ask for a copy of the land title or go to a Registry office and ask them to do a historical title search.
- In the offer to purchase, include the option to have the property appraised by a designated or accredited member of the Appraisal Institute of Canada.
- Insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house operation. Grow operators frequently use mortgage fraud to purchase their properties.
- Ask to see receipts for recent renovations.
- When you make a deposit, ensure your money is protected by being held “in trust”.
Here are some real estate fraud red flags:
- Someone offers you a fee to use your name and credit information to obtain a mortgage.
- You are encouraged to include false information on a loan application
- You are asked to leave signature lines or other important areas on a loan application blank
- The seller or investment advisor discourages you from seeing or inspecting the property you are offering to purchase
Courtesy of the Real Estate Council of Alberta
Title fraud can result in the following repercussions for a homeowner, courtesy of First Canadian Title :
- The cost of defending one’s right of ownership, which can cost tens of thousands of dollars;
- The stress and uncertainty surrounding the a resolution of title-related problems;
- The time spent waiting for resolution from the Land Titles Assurance Fund; and
- The loss associated with a fraudulent mortgage that is entitled to remain registered against the true home owner’s interest.