Real estate fraud costing Canadians millions
Real estate fraud is costing Canadians millions of dollars each year — perhaps even more than a billion — and becoming an “incredibly growing industry.”One of the country’s largest title insurers, First Canadian Title, says the upcoming busy real estate season in the spring can be a breeding ground for real estate scams, often averaging as much as $300,000 per case and industry estimates for how much real estate fraud costs Canadians range between $300-million and $1.5-billion each year.
On Thursday, First Canadian Title and the Consumers Council of Canada kicked off a public awareness campaign in Calgary warning homeowners of the growing danger. March is fraud prevention month across Canada.
Bill Huzar, president of the Consumers Council of Canada, said the real issue is there are so many different varieties of fraud but “this is one that is really hurtful because when the ordinary Canadian makes their biggest investment probably, the most expensive item they ever buy is their home.”
“The most difficult thing to understand is that people who are most at risk are people that have lived in their homes a long time, have increased equity because they’ve paid their mortgage down and now they’re feeling really good. And that’s the prime target,” said Huzar.
“It’s an incredibly growing industry.”
He said the risk is great in a real estate market such as Calgary’s, where the value of homes has risen so dramatically in the past year. As a homeowner’s equity has soared, so has the risk of becoming a victim of fraud, added Huzar.
Susan Lawrence, who was a victim of real estate fraud in Toronto, said police have told her this type of crime is easy and “is more lucrative and safer than dealing drugs.”
“The message is to be vigilant. Check your records. Check that you own your house,” said Lawrence. “If you’ve got any equity in it whatsoever, get title insurance because you won’t be stuck with legal bills of tens of thousands of dollars in fighting to get your house back.”
Lawrence put her house up for sale in the fall of 2005. Thieves stole the house in November and she discovered the theft in February, 2006. Thieves took out a fraudulent mortgage on her home for almost $300,000.
“A girl posed as me. Said she was selling the house. Sold it to another fraudster. The fraudster had all kinds of fake ID. … Then they went to the bank and got a mortgage for $300,000 and disappeared with the money,” she said.
Mortgage fraud occurs when individuals fabricate their qualifications to obtain a mortgage when buying a house. There is also mortgage fraud for profit, when someone intentionally defrauds a lender or a homeowner of their interest in a property through identity theft.
Ownership of a property is transferred fraudulently from the rightful owner to the criminal, who then sells or mortgages that interest and makes off with the funds.
Julia Jones, assistant vice-president, Western Region, First Canadian Title, said in 2006 the company started a process of underwriting title insurance policies to detect fraud in an attempt to prevent it.
“We prevented $20-million of suspected fraud, mortgages, and transactions in one year which involved 52 properties,” said Jones. “That gives you a pretty good idea that there is some serious concerns.
“As consumers, they need to protect their identity. That’s really important. … It’s important to do a credit search on yourself every once in awhile to make sure there’s no unusual activity. We recommend you even do a title search of your property from time to time to make sure there’s no unusual activity. And then, although title insurance doesn’t prevent fraud, it certainly can help you if you are a victim.”