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Real estate fraud continues to be a scourge that plagues the real estate industry in general. Real estate fraud costs us all because it leads to more regulation and to lenders ultimately losing most often, which makes them lend more stringently. The only way to combat mortgage fraud is to make it a priority, perhaps through something like a professional New Year’s resolution.
There was a great article in the Globe and Mail that sums up the 6 most common forms of real estate fraud which we thought is worth a second look because being aware of these schemes makes you more equipped to spot them and act accordingly.
Title fraud – this fraud is blatant and generally stems from identity theft. The fraudster will falsify documents, posing as the property owner. Then they arrange to transfer ownership of the property, then they obtain a mortgage against the property and so on… Title insurance is an excellent way to protect clients against this type of fraud. Closely scrutinize ID and match it against a Parcel Register*. Just as the bank will ask you security questions about your history, ask a questionable client things about the history of the property that a fraudster likely doesn’t know.
Home equity and foreclosure fraud: The Financial Consumer Agency of Canada (FCAC) warns that foreclosure fraud occurs when a property owner who is having difficulty making mortgage payments is approached by a criminal offering a loan to cover expenses and consolidate loans, in exchange for upfront fees and an agreement to transfer the property title. However, “in contrast to real debt consolidation programs”, the FCAC says, “the criminal will keep all the payments made by the owner and ignore bills and taxes. The criminal then remortgages the property and absconds with the money, leaving the former property owner without the home but still in debt.” You have to watch out for this because it is more common than you could imagine and is even an area of fraud of interest to organized crime.
Rental/Resale scams – This is where the fraudster steals your listings and impersonates you re: posting your listings on other websites to get calls from tenants and buyers to extract money. What to do – Google yourself every single month, as well as the addresses of your listings. This will not only catch this type of fraud but will also help you identify if there is anything negative online about your listing.
Knowing what types of fraud exist is half the battle. We hope we’ve helped when it comes to your New Year’s resolution to fight fraud with these quick tips.
To learn more about tools to help combat fraud, please visit www.geowarehouse.ca today.
*An official product of the Ontario government pursuant to provincial land registration statutes.