How FCT prevented $2.6 million in fraud
Mar 18th, 2021 | By FCT
On a day like any other, FCT received a request for title insurance for a blanket mortgage in the amount of $2.6 million, spanning five vacant properties, all with titles free and clear. The transaction involved a private lender and a corporate owner.
As part of the request, FCT was provided a copy of the Corporate Profile and the Corporate Document List, and everything looked okay at first. However, after we asked for supporting identification for the borrower, our eagle-eyed underwriting team determined that one of the pieces of identification being used was invalid.
Feeling a bit uneasy about moving ahead with the file, our underwriting team contacted the lender and the mortgage broker for more information. Years of experience and pure instinct told us that something was off. Our team then called the lawyer involved with a previous purchase of one of the lots, and it turned out that we were right! When compared, the two pieces of ID did not match and showed conflicting information.
For our underwriting team this was more than enough evidence to suspect fraud, especially with such a large deal. We declined to insure the deal and the lender pulled out as well. The real owner was contacted and their lawyer ultimately confirmed that the deal was fraudulent.
How can you protect yourself and your business from fraudulent deals?
In any transaction–purchase, sale or refinance–there are some red flags every real estate professional can look out for:
- The property being sold or refinanced is free and clear.
- There are discrepancies in SIN, employment, credit history or signatures of the client.
- There is recent activity on the title.
- The client has little to no credit history.
- The balance of the proceeds are made payable to anyone other than the registered owners after payment of secured creditors, taxes, legal fees, bank loans, credit cards, etc.
Fraudsters today are getting more and more inventive. If something doesn’t feel right, always trust your instincts and investigate further. It is also vital to know and understand the different types of real estate fraud that you may come across in your business.
If you’re not sure about a deal, you can also reach out to our underwriting team for expert advice. With decades of experience, you can trust us to have you covered.
Are there any other red flags you look out for during a deal? Share them with us in the comments.
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