Forget about zombies, vampires and witches. This year there is an even more frightening disguise out there: “the fraudster.”
When it comes to disguises, the fraudster is unfortunately very real. Although there is no one agency assessing the financial impact of fraud, industry insiders estimate that these scams cost Canadians between $300 million and as much as $1.5 billion each year. Not to mention the potentially huge losses resulting from unpaid mortgages, property foreclosures —and above all — the emotional and financial stress for the victims.
This is no Hollywood horror movie: this is reality in Canada today. And the fact is FCT pays out more as a result of title fraud than any other claim type.
Title fraud can happen in one of two ways:
Identity theft and impersonation
Using stolen identification or documents, the fraudster pretends to be the homeowner and obtains one or more mortgages on the property.
The fraudster registers forged documents to sell the property, registers a forged discharge of the existing mortgage (if one is outstanding) and then gets a new mortgage against the property’s clear title, walking away with the money.
There are many types of fraud with three main types affecting the real estate industry:
1) Title fraud occurs when the ownership or title of a property is fraudulently changed and/or the true owner is impersonated in order to fraudulently sell or mortgage the property.
2) Mortgage fraud is any scheme used to obtain a mortgage under false pretenses. An individual may apply directly to a lender or mortgage broker for a loan secured by real property to which they have omitted or misrepresented facts in order to obtain a mortgage.
3) Value fraud is another type of fraud that happens when a lender is led to believe the property is worth considerably more than it really is through either the concealment or intentional misrepresentation of the property’s attributes and value.
Real-life fraud horror stories
Consider these increasingly common examples of Canadian fraud stories*:
*Names and specific details may have been changed to protect the privacy of those involved.
The disappearing husband
A woman went overseas on an extended vacation to visit an ailing relative. While she was away, her husband forged her signature and fraudulently sold their property. When she returned, she found that the locks had been changed and new “owners” were living in her home. The husband then disappeared . . . .
A grisly discovery
A man went to the City to pay his taxes – a routine quarterly event. While there, the man was told by the City that he didn’t have to pay the taxes because he no longer owned that particular property. The man was flabbergasted — this was his family home he had lived in for decades. Only after much investigation did it come to light that he was a victim of an unlawful transfer of title and the mortgaging of his property for almost $110,000.
The house on the hill
A woman received a call from a mortgage collector saying she was three months behind on her mortgage payments. But the woman didn’t own a home nor had she ever taken out a mortgage to purchase one! Later that same night she also discovered that two other properties had been mortgaged in her name, leaving her on the hook for more than $400,000.
A dead ringer and a no-good niece
An older man passed away, leaving an estate which included a house located in another province. A few months later while probate was being processed, a man with his “niece” walked into a lawyer’s office and presented himself as the deceased, complete with forged ID. The man then transferred the house to the alleged niece, who promptly mortgaged the property, leaving the deceased’s widow with a $300,000 mortgage on her rightful home.
Fight fraud with simple solutions
The best way to fight title fraud is to purchase the ultimate in protection: title insurance from FCT. But aside from insurance, the best advice is to follow your instincts. If something doesn’t feel right, be extra vigilant and report any suspicious activities. You don’t have to be a victim.