March is Fraud Prevention Month in Canada, where governments and finance companies work together to shine a light on various scams. This year First Canadian Title (FCT) says the "dirty little secret of real estate fraud" is when one family member commits it against another family member.
FCT sells title insurance that covers real estate fraud, so it has a vested interest in making people aware of the issue. While the majority of real estate frauds are committed by strangers, FCT says "a significant portion of these frauds are committed by relatives."
"There has been little public discourse on the topic of real estate fraud committed by a relative, likely because there has only been a handful of media stories," says John Tracy, FCT legal counsel. "Victims of fraud are generally reluctant to come forward, while victims of fraud by a relative are even less likely given that the victim is often embarrassed as the family is supposed to be a place of love, respect and morality."
An example of a fraud claim the company received was during a separation when a spouse had their new partner pose as their current spouse to forge a new mortgage. Then they disappeared with the mortgage money.
Many claims involve adult children taking advantage of their parents -- for example, by moving back home and forging signatures of their parents to take out a mortgage on the house. In one case a son with the same name as his father took out a mortgage on the property and the parent had to go through a costly legal battle to prove he didn't sign the mortgage papers.
In many cases, caregivers forge a Power of Attorney to get control of a relative's property and then take out a mortgage on it.
Another example cited by FCT is when an adult child is acting as the trustee for the estate of a deceased parent and sells the property, keeping the money and not reimbursing the estate.
"These situations often arise when a family unit is under stress, or there is an exploitable opportunity," says Tracy.
FCT says it "declined to insure a mortgage on suspicion of fraud" on average twice a week in 2014.
The Canadian Bankers Association says there is no central organization that collects statistics about mortgage fraud in Canada, so its scope is difficult to measure. The Financial Consumer Agency of Canada (FCAC) says while real estate fraud isn't as common as debit or credit card fraud, the financial loss can be much greater for its victims.
There are three general types of real estate fraud. As described above, title fraud is when someone assumes the identity of the homeowner and then poses as them to assume title of the home and take out a mortgage or sell the house. FCT says if your home is mortgage-free, vacant or rented, it could be more susceptible to real estate fraud.
Mortgage fraud is when someone provides false information to obtain a mortgage for which they normally wouldn't qualify. This could range from lying about their income to providing a false appraisal of the property.
In a foreclosure fraud, a homeowner who is having trouble making payments gets a loan to consolidate all his payments, including the mortgage, paying an up-front fee and transferring the title of the property to the lender. The fraudster doesn't pay the outstanding bills or provide the loan and he may sell the home, taking off with the proceeds.
The FCAC says you should always contact your mortgage lender first if you are having trouble making payments. If you are thinking of getting someone to handle your personal assets, it's wise to consult with a lawyer first to make sure you can cancel this right if you no longer need it. If you have doubts about the title of your home, check the title with the provincial land registry.
Since most real estate frauds begin with identity theft, don't make it easy for scam artists to steal your identity. Don't give out your personal information over the phone or the Internet unless you know who you are dealing with. Remember that if a deal sounds too good to be true, it probably is.
Watch your bills closely to make sure they are correct and that they are arriving on time. Some criminals steal personal information by dumpster diving, mail box theft, phishing or computer hacking, says FCAC. Shred old bills, insurance forms or anything with your personal information on it.
Don't give out your Social Insurance Number unless absolutely necessary. Don't carry it in your wallet -- keep it in a safe place.
If you think you may be a victim of real estate fraud, contact the Canadian Anti-Fraud Centre at 1-888-495-8501. You should also report it to the local police and your financial institution.
