Most Canadians are well aware of the types of fraud they may be susceptible to if they don't guard their wallets and personal information with every fiber of their beings. After all, it seems like everybody has a relative or friend who found fraudulent charges on their credit card or bank statement, turning their financial security upside down in a nightmare of charge reversals and account updates.
However, just because real estate fraud isn't as common as bank, credit card and identity fraud doesn't mean it's any less terrifying and potentially damaging. Did you know that real estate fraud can shatter an otherwise perfect homebuyer's chances of owning their dream home, or – as a worst-case scenario, of course – even cause a person to lose their home?
Shudder. All Canadians need to be wary of the potential for real estate fraud and the chance that it can unfortunately happen to anybody. Here are a few helpful tips so you can protect yourself and loved ones from real estate fraud.
Title fraud starts with identity security
Some Dumpster divers may be searching for treasures among piles of trash, but there are some who may have not-so-nice ulterior motives. As in searching for documents that may enable them to fraudulently assume another person's identity.
Instances of title fraud originate as identity theft, including efforts by aforementioned Dumpster divers, mailbox thieves, computer hackers and the shameful people who use email to "phish" for personal information.
Once a fraudster has access to a person's confidential information by whatever means possible, they may use the identity to sell a person's home without their knowledge, transfer a title, secure a mortgage and then put the new home under their own name. For some people, this is all in a day's work – and the victim may not even know about it until it's too late.
Canadians can combat title fraud by properly disposing of documents containing confidential information, increasing personal information security whenever possible and never trusting random people with outside information.
Foreclosure fraud may be a result of lagging payments
Instances of legal foreclosure may occur when a homeowner has difficulty making regular mortgage payments, causing the lender to take possession of the home and sell it to cover the debt still owed. An easy enough concept, right?
However, foreclosure fraud may occur when a fraudster offers a struggling homeowner assistance in keeping their home. A too-good-to-be-true plan usually means just that, and can include various components that usually end up in the homeowner signing over the title of the house – knowingly or unknowingly – or paying exorbitant fees to someone who falsely promises to help them keep the house.
Keeping real estate fraud at bay
Not only should people be diligent in guarding their identities and personal information, they should also closely monitor financial accounts, credit scores and consider obtaining title insurance to better combat against possible cases of real estate fraud. Homeowners who have difficulty making regular mortgage payments are encouraged to not trust people spouting great-sounding promises; instead, contact a mortgage lender or financial expert immediately.
Canadians who suspect they or someone they know are victims of real estate fraud are encouraged to contact the Canadian Anti-Fraud Centre, and report the situation to police and credit-reporting agencies. Double-check the land registry to ensure the title is still in the correct name and notify lenders of potential schemes.
Ensure loved ones don't get duped
It's not physically possible to be a fly on the wall during all your family members' and friends' real estate meetings, but it doesn't mean the issue of fraud can't at least be discussed over dinner or drinks.
Not all so-called housing professionals play by the rules. In fact, a recent story in the Toronto Star reported that a real estate broker was recently sentenced to jail time after laundering $700,000 from a senior citizen. Although the details are a bit murky as to what means the broker took to swindle the man of his life savings, it offers a valuable lesson to us all: Take all necessary precautions to ensure loved ones are aware of real estate fraud risks. It's really better to be safe than sorry and potentially homeless.