Protect Your Self from Real Estate Fraud

realestatefraudReal Estate fraud is not as common as other types of fraud such as credit card fraud. But the consequences of it are very real and can result in a significant loss and expense.  In the worst case scenario it could mean losing your home!

What is Real Estate Fraud?  The 2 most common types are Title Fraud and Foreclosure Fraud.

In the case of Title Fraud, it starts with identity theft. A thief obtains your personal information and then identifies himself as you.  Identity theft can occur in a multitude of ways, including everything from computer hacking, dumpster diving, mailbox theft or break and entry.

Once the thief has obtained your identity he assumes title to your property and either sells your home or obtains a new or larger mortgage on the property.   Once the money from the sale or new mortgage is advanced to the thief he disappears.  You may not be aware of this fraud until you receive a knock on the door from the person claiming to be the new owner, or from the mortgage holder trying to collect payments.

In the case of Foreclosure Fraud, it is a “legal” process where a mortgage lender takes possession of a home for unpaid debt, (unpaid mortgage payments).  The fraud occurs when a criminal takes advantage of a situation where a homeowner is having financial difficulties paying the mortgage.  An offer is made for a loan to cover expenses and consolidate loans, in exchange for upfront fees and an agreement to transfer property title to the criminal.  The criminal will then ignore the agreement and not make any payments for taxes or the mortgage, keeping all payments made by the home owner. The criminal could also remortgage or sell the home and leave with the money.  In the end the homeowner will lose the home and be even further in debt!

How do we protect ourselves from this serious fraud?  The first line of defense is to do everything you can to protect your identity.  Read our blog on preventing Identity fraud and other useful tools can be found on government websites.

Here are some tips to prevent falling prey to Real Estate Fraud.

  • If you are having financial problems, and difficulty making mortgage payments:
  • Contact your lender first.  Your lender wants to help you find a way to work things out, and may surprise you with solutions.
  • Before you give another person a right to deal with your personal assets, consult with a lawyer that is working for you, not the potential lender.
  • Consult your provincial land registry office to ensure that the title of your home is in your name.
  • Check your credit report regularly to make sure the information is accurate. You can get a credit report for free by mailing your request to one of the two credit reporting agencies, Equifax and TransUnion at least once a year.
  • Consider getting title insurance. Title insurance covers losses related to title fraud and legal expenses to restore a title. There are two types of title insurance, for lender protection and or individual protection when there is no longer a mortgage.

If all these tips fail and you believe you are the victim of Real Estate fraud.  Contact the Canadian Anti Fraud Centre (CAFC), a national anti-fraud call centre, at 1-888-495-8501 or info@antifraudcentre.ca).  You should also report the situation to the police, and record the police report number. Report the fraud to the two credit-reporting agencies, Equifax and TransUnion.  Contact your provincial land registry office as soon as possible. Find out what laws may exist in your province to protect you if you are a victim of real estate fraud. Contact your financial institution. Keep all of the documents that provide evidence of the fraud. Record the name of the person you spoke to at the bank, as well as the date and time you called and when you became aware that you are a victim of fraud.