If you are a home owner who has not purchased recently, you may not have TITLE INSURANCE. You could find yourself the victim of a mortgage fraud that could result in your home being mortgaged and funds stolen without your knowledge! Please read on ....
The following is taken from an article by Louie Rosella for THE MISSISSAUGA NEWS, Sep 27, 2005
Crime by Real Estate Fraud Artists out of control in Peel
While Peel Region already is home to 15 per cent of all real estate fraud in Canada, police, local lawyers and bank officials admit they are fighting a losing battle.
"The people that do this are so good, they may never be caught," said real estate lawyer Jack Zwicker, whose Mississauga client fell victim to a $315,000 real estate fraud recently. "It's really gotten out of control."
Peel Regional Police are currently investigating a $5 million real estate fraud.
First Canadian Title, a leading provider for title insurance in Canada, said this crime has taken off in Peel because of the hot housing market.
"Certainly, real estate fraud is a more lucrative crime in areas with high real estate value and an increasing real estate market, such as Peel Region," said Susan Leslie, First Canadian Title's vice-president of claims and underwriting.
In 2000, just six per cent of claims paid out by the Canadian insurer had to do with real estate fraud. Last year, that number jumped to 36 per cent.
"It's been a terrible ordeal for homeowners. Some people have lost businesses, others have had health problems, all because they've fallen victim to this crime," said Leslie.
While about 85 per cent of transactions in Canada are now title insured, Leslie said there are still people out there who feel they don't need this type of insurance. She is pleading with homeowners to get the insurance and pay a small fee so they will be covered in the event they are cheated out of hundreds of thousands of dollars.
Most real estate frauds work in one of two ways. In one scenario, a fraudster assumes the identity of a home's registered owners, while another assumes the identity of a prospective purchaser.
The fraudsters make up phony purchase and sale agreements and deliver them to separate lawyers. The phony buyer then secures mortgage financing.
The deal is made at a bank. And the fraudsters walk away with the mortgage money.
In another scenario, a fraudster steals the identity of a homeowner with a mortgage-free property, claims to the bank that he wishes to re-finance the home, and walks away with the new mortgage money given to him by the bank.
In both these cases, Zwicker said, the real homeowner doesn't become aware of the crime until he receives a letter from the bank asking for mortgage payments.
Typically, Zwicker said, mortgage fraud involves the use of false identities and the artificial inflation of property values. Both these elements can be present in the same transaction.
"It's so easy nowadays to get a fake passport, or driver's licence," said Zwicker.
He added that, in this new age of the Internet and electronic documents, it's extremely easy to change the title on a home or obtain other personal information "if you know someone on the inside or know someone with knowledge of the real estate industry."
While Peel Regional Police didn't have numbers readily available yesterday on the number of real estate and mortgage fraud investigations this year, Detective Sergeant John Betts, head of the fraud bureau, acknowledged it is increasing.
"Everybody involved in the process, from mortgage brokers to bankers to lawyers, have a responsibility to ensure everything is verified," he said. "This type of crime occurs when someone fails to do their due diligence
or when someone becomes collusive in the crime."
Zwicker said he and other lawyers now ask for photo identification for new clients, but said "we're not trained to detect phony documents."
While banks have security measures in place in an effort to detect fraud, Canadian Bankers Association spokesperson Maura Drew-Lytle admitted bankers have been duped by the criminals.
"Sure, the banks take losses on it," she said.
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