Watch out for fraud this holiday season!

Dec 6th, 2017 | By FCT

At the height of the holiday rush, FCT’s commercial division 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 (first red flag!). 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 – everything looked okay.  However, after supporting identification for the borrower was received upon our request, 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, FCT underwriting 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 — 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 a fraud.

During the holiday season, fraudsters take advantage of the busy time and distractions to implement their scams. In any transaction – purchase, sale or refinance – there are some red flags you can look out for:

● 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.

● Quick closings where you don’t know the clients.  Most fraudsters go to solicitors/notaries who don’t know them and hope to pull off the fraud quickly.

● Power of Attorney transactions – why is the Power of Attorney being used and can you contact the Donor?

● The property being sold or refinanced is free and clear.

● Discrepancies in SIN, employment, credit history or signatures of the client.

● Recent activity on the title.

Fraudsters today are more innovative than ever. It’s always best to trust your instincts. If something doesn’t feel quite right, investigate further!

Are there any other red flags you look out for during a deal? Share them with us in the comments.

Categories: Fraud, Legal Professionals

3 Responses to “Watch out for fraud this holiday season!”

  1. Ben says:

    Some other warning signals can be:
    – Prospects need fund in a rush;
    – The borrower is a newly registered entity;
    – The lawyer/ law firm involved is a one person office;
    – The transaction is out of the prospect’s usual line of business;
    – The amount of fund required is not in line with the type of business;
    – Inconsistency among the names, SIN, addresses, over related reports;
    – Short or no credit history.

  2. John-eric Pollabauer says:

    Thank you for providing this Fraud Report.

    It reminds and reassures me that it is mission critical to really be in a position to know your clients in these types Of transactions, since you certainly don’t want to be caught in a fraud scam, and ruin your professional reputation.

    • FCT says:

      John-Eric, thank you for your comment. It’s a busy time of year and it’s unfortunate that these fraudsters take advantage when you least expect it.

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