Part II: Title & Mortgage Fraud. How To Protect Yourself
Monday May 01st, 2023
As you read in Part I, recent news stories have highlighted the dangers of real-estate title fraud, which take place when fraudsters or scam artists steal ownership of a home in order to benefit from its value.
Earlier this year, a scam was thwarted where someone used fake identification to pose as the 95-year-old homeowner and convinced real estate agents to list the home for sale without the family's knowledge or permission.
There’s also an ongoing investigation, in which police say two homeowners left Canada for work in January 2022 only to learn months later that their property had been sold without their knowledge by people using fake identification.
You can take steps to protect your identity.
Stealing a person's identity is often the first step in title fraud.
Government-issued identity documents, including driver's licences, passports, birth certificates, social insurance number (SIN) cards and citizenship cards, can all be used to apply for mortgages or to take steps to buy or sell a home.
The Canadian Anti-Fraud Centre offers the following tips for preventing identity theft:
- Be wary of who you share personal information with.
- Regularly check credit card reports, bank and credit card statements and report anything irregular.
- Shred documents containing personal information before placing them in the garbage.
- Limit mail theft by regularly retrieving mail.
- Notify the post office, financial institutions and other service providers of your new address when you move.
Get title insurance.
Title insurance is an insurance policy that protects property owners and their lenders against losses related to the property's title or ownership, including from title fraud, according to the Financial Services Regulatory Authority of Ontario (FSRAO).
While it can't prevent you from becoming a victim of fraud, it is the single most important thing to mitigate its consequences.
Title insurance can cover legal expenses incurred by homeowners seeking to restore their right to their property's title, according to FCT.
It protects homeowners from fraudulent claims on their property and pays for legal expenses to re-establish the homeowner's title rights. You
If you already own your home (freehold or condo), and/or any secondary or investment properties, please take the time to check if you’re covered under Title Insurance. You may not be and it’s critically important that you are. It's a simple call to your Real Estate lawyer. And if you don't have one, I will be very happy to refer you to one of my most trusted Real Estate Lawyers.
If a buyer unwittingly buys a home that's been fraudulently listed, the insurance should also protect them. In cases like that, the true owner will likely get their home back and the unwitting buyer will get their money back.
Know the people you're dealing with.
There are not enough 'checks and balances' in place to prevent title and mortgage fraud. I’d like to see the industry make changes to keep up with fraud and scams
People on both sides of a real-estate transaction should make sure they're comfortable with the identity of the person on the other side of the deal.
Either side should be very, very careful to verify and ensure that the other party they're dealing with is actually in a position, a legal position, to sell the property that they're considering.
Murtaza Haider, a professor of data science and real estate management at Toronto Metropolitan University, said he spoke to neighbours the last time he was looking to purchase a home, asking them about the property and the current owners in a search for potential red flags.
Simply Googling a person's name and cross-checking social media photos can also help turn up any irregularities, Haider said.
The most important thing is to protect your identity and adopting these measures will definitely help.
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