Title fraud is when a fraudster steals your identity and forges documents to either re-mortgage your home and walk away with the proceeds, or to sell your home right out from under you.
Fraud comes in many forms and whether it’s referred to as mortgage fraud, real estate fraud or title fraud; it is a growing problem in Canada and across North America.
The three main fraud types affecting the real estate industry in Canada are:
- Title fraud — when the ownership or title of a property is fraudulently changed or documents are forged to allow a fraudster to illegally sell or refinance the property.
- Mortgage fraud — a scheme used to obtain a mortgage from a lender under false pretenses, also known as application fraud.
- Value fraud — where a lender is led to believe a property is worth more than it really is through concealment or intentional misrepresentation of the property’s attributes and value.
The effects of title fraud
Unlike credit card fraud, title fraud puts the onus on you as a homeowner to prove that real estate title fraud has occurred. If you are a victim and don’t have a title insurance policy in place, it can take considerable time, money and effort to deal with having to restore your title and/or remove any fraudulently registered mortgages. Plus, until the title is restored, you will be unable to sell or mortgage your home, potentially derailing important financial plans.
Although title insurance can’t prevent you from becoming a victim of fraud, it can protect you from many of its consequences and the resulting stress.