Stories about real estate fraud have been in the news recently and it’s important to better understand what real estate fraud is and how you can protect yourself and your home.

What is real estate fraud?

There are many different types of real estate fraud, but the two that consumers should be aware of are mortgage fraud and title fraud. Very often, the term mortgage fraud is used when title fraud is meant, but the two terms are very different.

• Mortgage fraud occurs when someone intentionally provides inaccurate, fraudulent or incomplete information to a lender in order to get a mortgage that they might not otherwise be granted. This could include anything from claiming to have a higher income than they actually have to providing falsified proof of identification or a falsified appraisal of the property. If you are the victim of identity theft, then a criminal could also obtain a fraudulent mortgage in your name without your knowledge.
• Title fraud occurs when a criminal steals the identity of an individual homeowner and then uses that false identity to steal the title of their home through false documentation filed at the land registry office. They could then sell the property or obtain a mortgage on that property or other properties in the homeowner’s name. Properties that are mortgage-free and unencumbered tend to be more vulnerable to this type of fraud.

Putting title fraud into perspective

The possibility of having the title to your home stolen and mortgaged without you being aware of it is, of course, extremely upsetting. It is, however, very unlikely. For example, recently the Ontario government reported that there are about 10 instances of title fraud a year in the province while there are more than 2.5 million mortgages.

Banks and all other partners involved in real estate transactions take the issue of real estate fraud very seriously and work together with other lenders, police, government, real estate groups, and the legal profession to look closely at real estate fraud to determine what changes can be made, individually and collectively, to prevent fraud and protect Canadians.

What can you do?

Most cases of title fraud and mortgage fraud are the result of identity theft. There are a number of steps you can take to help protect yourself from identity theft and mortgage and title fraud:

• You can conduct a property search at your provincial land registry office to ensure that the title to your home is in your name.
• You may want to consider buying title insurance, which provides protection for stolen title as well as other risks. A lawyer can help you decide if this would be of benefit to you.
• Protect your personal information. Only provide what is necessary, find out how it will be used and if it will be shared and know who you are dealing with before providing the information.
• Consider buying a shredder. An identity thief will pick through your garbage or recycling bins. Be sure to tear or shred receipts, copies of credit applications, insurance forms, physician statements and credit offers you get in the mail.
• Guard your mail. Deposit outgoing mail in post office collection boxes or at your local post office. Promptly remove mail from your mailbox after delivery. Ensure mail is forwarded or re-routed if you move or change your mailing address.
• Minimize the identification information and number of cards you carry, especially your Social Insurance Number card and your birth certificate. Leave them at home in a safe place.
• Give your Social Insurance Number (SIN) only when absolutely necessary. Ask to use other types of identification when possible.
• Check your credit report annually. Reviewing your credit report can help you find out if someone has opened unauthorized financial accounts in your name. There are three credit reporting agencies in Canada: Equifax Canada, Northern Credit Bureaus Inc. and TransUnion Canada. You can request free copies of your credit report from credit reporting agencies by mail or online versions are available for a small fee.

For more tips, or to download the CBA’s free booklet, Safeguarding Your Money, visit the Fraud and Security section of the Canadian Bankers Association website. Booklets are also available by mail by calling 1-800-263-0231.

Canada’s banks take the issue of privacy, security and fraud prevention very seriously. They work hard to prevent their operations and customers from being used for any kind of financial crime and to raise awareness about the ways that customers can protect themselves.

As a consumer, you also have an important role to play in preventing fraud. This month we’ll be taking a look at mortgage and title fraud.