The number of real estate and mortgage frauds is increasing rapidly in Canada. Homeowners should take steps to protect their property and identity, experts warn.
Title transfer fraud occurs when property titles are falsified to allow a fraudster to illegally sell a property or obtain a new mortgage.
The issue came into the spotlight last year when Toronto police investigated cases of properties being put up for sale without the owner’s knowledge.
Daniel La Gamba, a real estate lawyer, says mortgage fraud is more common. The fraudster steals the identity of a legitimate homeowner by using a fake ID, references, employer letter or credit report to obtain a mortgage loan. If the bank is convinced of the identity of the person, it can advance funds to them. She will only notice the scheme when she realizes that she has not received any payment.
Even with security measures in place, fraudsters are becoming more sophisticated in their ability to forge IDs, to steal an identity. Sometimes you can only rely on your own doubts. If something seems odd, ask more questions.
Me Daniel La Gamba, lawyer specializing in real estate law
And the burden of proving that their identity was stolen falls on the shoulders of the victim, which can be a great source of stress for them, adds the lawyer.
According to Me La Gamba, one of the best ways to protect yourself for an owner is to have title insurance. The premium can be around $900 for a million dollar property. It covers the entire period during which this property is held.
“If you have title insurance, the company puts itself in your shoes and takes steps to correct the situation. If we don’t have one, we find ourselves all alone. The task will be laborious and very expensive. »
More vulnerable
FCT, a provider of title insurance products, estimates that there is at least one attempted real estate fraud every four business days. In recent years, the company has refused to insure $539 million in mortgages and conveyancing because it found the transactions too suspicious, says John Tracy, FCT’s senior legal counsel.
The reason for fraudsters’ enthusiasm for the real estate market is simple: “the return is extraordinary,” says Mr. Tracy.
“Of course the fraudster can get a credit card in my name. He will get $10,000 worth of items or gift cards. But if he steals my identity and gets a mortgage, the payoff is so much higher. »
According to experts, the most frequent targets of fraudsters are newcomers, who are particularly vulnerable because of the language barrier, and the elderly.
“As a general rule, fraudsters target mortgage-free homes,” says M.e The Gamba. In this scenario, it is the elderly who are most targeted. They have owned their house for twenty or thirty years, the mortgage has been completely paid off. »
Daniela DeTommaso, president of FCT Canada, says the company began tracking real estate fraud in 2010. It saw a 70% increase over the next 10 years. The pace has arguably accelerated during the pandemic as reliance on remote technological means and digital verification has increased.
Technology is a wonderful thing, but it has created the ability for fraudsters to duplicate an ID in such a way that it becomes almost impossible for even trained eyes to spot.
Daniela DeTommaso, President FCT Canada
On its internet page, the Financial Markets Authority recommends “shredding your personal documents before recycling them [et] to put away your confidential papers properly.”
She also recommends being wary if “a person asks to sign documents on their behalf, if they ask to sign a power of attorney which contains very few limits on the powers granted”.
Other reasons to fuel distrust: if you offer to sign a document with blank sections that another person will fill in later, if you are offered only verbal guarantees or if you have to proceed quickly.