Homeownership is a dream for many. Unfortunately, some people take advantage of this and commit fraud. Even with the COVID-19 pandemic going on, it seems that there is an increased incidence of real estate fraud in Canada.
Real Estate Fraud is on the Rise
Plenty of homeowners face challenging financial situations these days due to changes associated with the pandemic. Some have lost their jobs or businesses and are unable to make mortgage payments. Some may be unable to hold on to multiple properties due to increased expenses. In fact, the Canadian Bankers Association reported that 710,000 skipped payments or mortgage deferrals were processed by banks in the last few months. This predicament did not escape the radar of fraudsters and thus, there is an increase in the occurrence of the types of real estate fraud discussed below.
Foreclosure Fraud
Paying a mortgage on time is a problem for many during the pandemic. Although skipping mortgage payments may be allowed by some banks for up to 6 months, any mortgage owed is still accruing interest. Some people may feel that they must do anything to avoid accruing more debt and may be susceptible to offers made by fraudsters. In foreclosure fraud, the fraudsters make the victim sign a legal document that will allow the fraudsters to have a claim over the property (a lien, another mortgage, etc.) that the fraudster can later use to foreclose on the property. Fraudsters may claim that the homeowner failed to comply with one of their terms and use that as a reason to take over the property. The victim often does not suspect anything until it is too late.
Title Fraud
Title fraud starts with identity theft. Fraudsters target victims who do not have much left to pay on the property or are already mortgage-free. After they steal the homeowner’s identity via phishing scams, phone scams, or mail interception, the fraudsters then create fake identification using their own photos and proceed to forge documents related to the property such as land titles. They use the fake identification and forged property documents to sell the property or remortgage the property and get a big chunk of its value.
Mortgage Fraud
Mortgage fraud typically involves the notary and the bank; and facilitated by the broker. It looks like a normal mortgage until the homeowners realize that the home is way beyond their means because the broker forged some documents just to get the loans approved. This can be achieved by claiming an income of $170,000 when the real income is just $107,000. By looking like a mere typographical error, a second mortgage loan beyond the homeowner’s means can be approved. Institutions often do not report this type of fraud upon discovery because admitting they were frauded will reflect badly on their image.
Combating Real Estate Fraud
Fraud is truly everywhere especially now that many people are experiencing financial hardship. What you can do is to stay vigilant and informed to minimize the chances of you falling victim to real estate fraud. If you suspect real estate fraud, the first thing you should do is to report it to the authorities such as your local police and the Canadian Anti-Fraud Centre. You can also double-check companies with the help of professional private investigation services and make sure to protect your sensitive data to prevent real estate fraud.
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