The Dirty Little Secret of Real Estate Fraud
OAKVILLE, ONTARIO, March 2, 2015– Annually as part of Fraud Prevention Month in March, FCT provides an update on the trends in real estate fraud (real estate fraud includes mortgage and title fraud). This year we are going to share an issue that rarely sees the light of day – real estate fraud committed by one family member against another- and often adult children committing fraud against elderly parents.
The FCT campaign “Retire Your Home” focuses on a specific fraud target -retirees – to warn them about the “home profiling” of seniors’ homes by fraudsters; this March we are focusing on the perpetrators. While, strangers who steal identities and forge documents to commit real estate fraud still makes up the majority of perpetrators, a significant portion of these frauds are committed by relatives.
“We are alerting homeowners that the risk to their home’s financial security may come from within its own walls. Just like other forms of crime and elder abuse, a family member may play the leading role in real estate fraud against a relative,” says John Tracy, FCT Legal Counsel and resident fraud expert. “These situations often arise when a family unit is under stress, or there is an exploitable opportunity.”
Here are some of the more common family situations where FCT has seen fraud claims:
Divorce and Separation
During a separation, one spouse will have their new significant other pose as their current spouse to forge a new mortgage and take off with the mortgage proceeds.
Financial Stress
Adult children under financial stress who move back home to live with parents, gain access to their financial information which they use to commit mortgage fraud. One spouse takes out a mortgage by forging the other spouse’s signature and uses the mortgage proceeds to cover unpaid debts or fuel an addiction like gambling or substance abuse.
Ageing and Loss of Mental Capacity
A relative in a caregiver role forges a Power of Attorney to gain control of their elderly relative’s property and mortgages the home.
Situations where there is an Opportunity to Exploit
A child who acts as the trustee for the Estate of his/her deceased parent sells the family property and keeps the proceeds of the sale and does not reimburse the estate set up for his/her widowed parent and other siblings
Situations where there is an exploitable opportunity include instances where an adult child shares the same name as a parent. A court case, B & M Handelman Investments Ltd. v. Curreri 2011 ONCA 395 (CanLII) involved a son with the same name as his father committing fraud by taking out a mortgage on property whose title was held by his father. It was a costly legal battle for the parent to prove that they did not sign the mortgage documents.
“There has been little public discourse on the topic of real estate fraud committed by a relative. Likely because there have only been a handful of media stories. 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,” advises Mr. Tracy.
Unless you have provided the fraudster with a legitimate Power of Attorney, your homeowner’s title insurance policy will protect you from fraud committed by a stranger or relative, provided there was no collusion on your part. Tips on how to minimize the potential for real estate fraud through a Power of Attorney are available at www.retireyourhome.ca in addition to tips for those renting their home, and snowbirds/travelers.
“At FCT we take great care to manage these difficult claim situations with the utmost tact, privacy and dignity for all of those involved. Your homeowner’s title insurance policy will protect you from the fraud committed by anyone, known or unknown to you, against you or your estate. FCT pays for all the legal fees to defend against fraudulent mortgages and transfers of your property or estate.”
About FCT
Founded in 1991, the FCT group of companies is based in Oakville, Ontario, and has over 800 employees across the country. The group provides industry-leading title insurance, default solutions and other real-estate-related products and services to approximately 1,250 lenders, 43,000 legal professionals and 5,000 recovery professionals, as well as real estate agents, mortgage brokers and builders, nationwide. For more information on FCT, please visit the company website at www.fct.ca.
The FCT group of companies includes FCT Insurance Company Ltd. which provides title and valuation insurance, with the exception of commercial policies, which are provided jointly by FCT Insurance Company Ltd. and First American Title Insurance Company. Services are provided by First Canadian Title Company Limited
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Media Contact:
Wendy Rinella, FCT
905 287-3379
wrinella@fct.ca