February 10, 2013
So Stevie, how does this happen? Let’s start from scratch. When a home is purchased, title to the property is obtained through your lawyer who registers your name as the owner in the provincial land registry system.
Fraudsters are keenly aware that in order for their scheme to appear legitimate, they must in turn find a way to obtain your legitimate identity. There are a couple of ways these criminals go about this – often without your being the least bit aware:
- Dumpster diving (yep, never toss out official documents or notices—shred them!)
- Mail box theft (easier to do with a house—a little more difficult in a condo where mailboxes have keys)
- Phishing (email pretending to come from a legitimate source such as a friend or relative)
- Social Media Monitoring (confirming your name, location, date of birth and relatives on Facebook for example. How many of us have passwords named after our nieces or nephews?)
- Computer/Email hacking (directly hacking onto your hard-drive or intercepting your emails)
Once details about your identity (driver’s license #, social insurance # etc + the above) have been stolen, fraudsters use the information to impersonate you, changing documents such as transferring title to the property or even going as far as obtaining a new mortgage.
Whenever I mention this part I get a lot of raised eyebrows. Homeowners who no longer have a mortgage on their property or who rent out their premises to tenants are often the biggest targets for title fraudsters. Why?
Well boys and girls – a fully owned home is ripe with that juicy thing called equity! It’s therefore much easier to refinance this kind of property than one carrying a mortgage–hence its appeal!
A rented property on the other hand often doesn’t have the owner on-site on a daily basis to observe comings and goings–like buyers coming to view the home for “sale.”
I advise clients who are mortgage-free to check on their title at least twice a year at your local provincial land/title registry office. For landlords who do not live on site, have your Realtor include a clause in the Lease Agreement allowing periodic inspections.
Take it one step further and drive by your property once per week. Become friendly with neighboring property owners who are more likely to call you if suspicious activity is seen. Many fraudsters will not post a for sale sign on the property so its a good idea to have relationships with homeowners adjacent to your property.
While foreclosures aren’t as common in Ontario as their younger cousins–Power of Sale, it’s definitely worth highlighting. Let’s get technical for a sec: A foreclosure is a legal process whereby a mortgage lender takes possession of a property and sells it to recover outstanding debt incurred by owners who have fallen on hard times.
For homeowners going through financial hardships, the lurking threat of foreclosure often force some to seek out loans from just about any source willing to extend a hand. It’s at this juncture where fraudsters seek to capitalize on an opportunity to take advantage.
The tactic involves offering the homeowner financing to cover expenses and consolidate loans, in exchange for up-front fees and a written agreement to transfer the property title.
What happens instead (and this goes against real debt consolidation programs by the way) is that the fraudster ends up keeping all payments made by the owner and ignore outstanding bills and taxes piling up.
Bare in mind folks that that when I say fraudster, I’m not using restricting this description to random uncrupulous individuals. In fact, many of these efforts are well organized and sometimes operate under a business entity, conspiring with banking, real estate and legal professionals. The key is to know who is representing you.
Always, always, speak to more than one person who has done business with the professional you’re about to hire. Loosing your home through fraudulent means weighs heavy on both your dignity and your pockets.
Proactive Steps You Can Take
- Thoroughly research the company or individual offering you the loan.
- From time to time, do a land-title search on your own property at your provincial land registry office. This search will show the name of the property owner and any mortgages or liens registered on the title.
- Always, always, always obtain title insurance to protect against title fraud!
- Contact your mortgage lender first if you are having difficulty making your mortgage payments.
- Consult a lawyer before authorizing any individual or organization the right to deal with your home or other assets.
If You Suspect You’re a Victim of Real Estate Fraud
- File a report with your local police.
- Notify your mortgage lender/and or Mortgage Broker.
- Advise Canada’s two credit rating agencies, TransUnion and Equifax.
- Call or visit your provincial land registry office.
- Begin a written log: write down when you noticed the fraud and the actions you took, including names of people you spoke to and dates of communications.
- Contact your financial institutions and any other companies (e.g. phone company, cable provider, etc.) where your accounts were tampered with, or are at risk of being tampered with.
- Contact the Canadian Anti-Fraud Centre HERE