REAL ESTATE FRAUD FAQS

Real Estate Fraud FAQs

Real estate title fraud can happen to anyone. It’s up to you to get informed and protect yourself.

Industry Statistics
 

• Real estate industry insiders now peg the average case of real estate fraud at $300,000. In comparison, the RCMP estimates the average credit card fraud case in Canada to be $1,200.
• Fraud is on the rise! In 2000, real estate title fraud claims accounted for only 6 per cent of total dollars paid in claims at First Canadian Title. By 2005, that number reached 33 per cent.

How real estate title fraud can affect you

• You will have to repair your credit rating
• You will have to reclaim your identity in the case of identity fraud
• You will have to incur the cost to defend your ownership of the property, which can cost tens of thousands of dollars
• You may suffer emotional and mental distress
• You may lose your home altogether
• You may suffer economic loss if you must rely on credit cash flow, particularly for business owners which can result in significant loss

Fraud Indicators – What Your Financial Institution/Lender Will Be On the Lookout For
 

• How well the lender knows you – The lender may ask for plenty of photo identification and may verify details with other parties involved in the transaction such as your lawyer or the realtor.
• The validity of the client for non face-to-face transactions – Virtual transactions are becoming more popular but are a haven for fraudsters. The lender may require additional information such as a utility bill with name and address or a personalized cheque.
• One or more of the borrowers is not available to attend and sign the documents – All borrowers involved in the transaction should meet with the lender.
• Counter cheque is presented for deposit purposes – A personalized cheque is preferable for the lender.
• The property is free and clear with no mortgages and the property value is substantial – The lender may check with the credit bureau and ensure you’re your salary information is consistent with the type of property being used as collateral.
• The property is owner occupied or a rental - There have been cases where a tenant either mortgages or sells the property unbeknownst to the real owner of the property and runs off with the money.
• The client will only provide a cellular number for contact purposes – This could be an indicator that there is something suspicious. You should provide the lender with home and business telephone numbers.

How You Can Protect Yourself

For a one-time premium, in many situations consumers are protected by a title insurance policy where a loss is incurred as a result of real estate title fraud. A title insurance policy covers all legal expenses related to restoring a title and is also available to existing homeowners long after they have purchased their properties.

For more information on real estate title fraud, visit www.ProtectYourTitle.com

Most Common Types of Fraud

Fraud by Forgery
A fraudster registers forged documents transferring the property of an innocent victim to his or her name, then registers a forged discharge of the existing mortgage, and finally obtained a new mortgage against the property and then makes off with the money without making payments. The mortgage then goes into default and the lender commences foreclosure proceedings. The registered owners of the property deny they signed the mortgage. They later find out their grandson has forged their signatures on the mortgage documents, inventing a “lawyer” and purchasing a stamp at a stationary store in order to authenticate the documents.

Identity Theft and Impersonation
A homeowner discovers she has become a victim of fraud when a lender tells her that someone has impersonated her to obtain financing on her property. The impersonator has had a mortgage broker arrange for a first and second mortgage on the property. It is revealed that when the impersonator met with a lawyer to sign the mortgage documents, he produced a fake driver’s license as evidence of his identity. The funds were then advanced to the impersonator. Often, this can happen when a person has an accomplice impersonate his or her spouse in order to mortgage the property in which they live.

Information provided by First Canadian Title