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Buying a home is one of the largest financial investments of your lifetime. And while owning real estate brings with it a sense of stability, achievement and a dream come true, it’s not without a certain element of risk. 


Mortgage fraud is a growing problem in Canada. Criminal activities, particularly in the financial and housing sectors, negatively affect our overall economy which, in turn, impacts us all. Sophisticated scammers who prey on innocent homebuyers are becoming more prevalent and their deceptive practices harder to detect. It’s, therefore, critical to become educated, stay informed, use common sense and learn to identify red flag warnings for fraud.  


What’s mortgage fraud?

Mortgage fraud occurs when someone deliberately misrepresents or omits key information in order to obtain mortgage financing that would otherwise not be approved. In other words, the mortgage is obtained under false pretenses. 


There are many moving parts in a mortgage transaction, involving multiple players and large sums of money. Canadian household debt is on the rise, supply is shrinking and elevated prices are leaving some people worried they’ll never own a home. This chain of circumstances fosters a breeding ground for fraudulent activity. As a homebuyer and homeowner, it’s imperative that you understand the significance of mortgage fraud and its implications so you can protect yourself against predators. 


Title fraud

One of the most common types of real estate fraud involves the ownership, or title, of the home. Title fraud occurs when the ownership of the property is fraudulently changed using a false or stolen identity or when forged documents are used allowing a fraudster to illegally transfer the ownership to themselves or someone else without your knowledge. Once this occurs, the fraudster can re-mortgage your home or sell your home right out from under you. 


Fraud prevention

During the homebuying process, you’re required to provide complete and accurate information on all documentation, at all times. Make sure you read and understand each document before signing. If you’re uncertain at any time, ask questions, or consult with a lawyer. Never sign a blank document, provide false or even slightly exaggerated information and don’t let anyone encourage you to provide distorted or dishonest information.  


When assembling your homebuying team, consult with friends and family members for trusted referrals and ensure you check references. Some members of your team are required to hold a professional licence – make sure they do – and verify their licence is up to date with the applicable regulatory body.  


Before you reveal any personal information, find out how it will be used. Be aware of suspicious emails asking for personal details and avoid sharing personal information over the phone or via social media.  


Review your bank and credit card statements as well as your credit report regularly. This will allow you to spot any discrepancies. Notify your financial institution or the credit bureau immediately should you notice any irregularities. Also, keep track of any automatic withdrawals from your bank account and follow up if your bills don’t arrive when they should.  


Shred all documentation containing your personal information rather than simply throwing it in the garbage or recycling bin. 


To protect yourself against title theft specifically, purchase title insurance. This essentially protects the ownership of your home. As the name implies, title insurance protects you against losses associated with title fraud, as well as other issues such as claims, liens or even mistakes in public records. You can also conduct a property search with the land registry office to ensure that the title to your home is indeed in your name.


If you think you’ve been a victim of real estate fraud or feel that there have been shady situations taking place during the mortgage financing process, document all your concerns in detail and contact the institutions where you feel there has been a breach (financial institution, credit bureau, land registry office). You may also want to file a police report or notify the Canadian Anti-Fraud Centre.


Have questions about protecting yourself from mortgage fraud? Answers are just a call or email away!