Friday, August 04, 2006

Title fraud can happen to anyone, cost can be enormous

(Jul 28, 2006)
It happened to Susan Lawrence. While going through proceedings to sell her home earlier this year, the area woman learned that she had become the victim of fraud, joining a growing number of Canadians who have been victimized by real estate title fraud.

"I went to the bank to discuss my mortgage because of the pending sale," says Lawrence, who has lived in her home for almost 30 years. "I found out my mortgage had been discharged and a new fraudulent mortgage assigned to my house at another bank without my knowledge. I couldn't believe it. I had heard of mortgage and real estate fraud, but never thought it could happen to me."

The scam occurred as follows: someone unknown to her forged her signature, discharged her existing mortgage, took out a new mortgage for almost $300,000, pocketed the money, then defaulted on the mortgage and disappeared.

Ms. Lawrence believes her nightmare started when a For Sale sign went up on her front lawn, giving fraudsters an opportunity to consult the MLS listing for the property and gather information they needed. Then they simply posed as her to fraudulently sell her house, discharge her small mortgage and take out a new one.

After several sleepless nights and endless hours spent with her lawyer, her bank finally withdrew a possession lawsuit, which meant she did not have to move out of her home. Good news under normal circumstances, except that now she is faced with having to restore her title, even though the new mortgage on her home was obtained fraudulently by a third party.

Susan Leslie, vice president of claims and underwriting at First Canadian Title, estimates the average case of real estate fraud to be $300,000, compared to estimates of $1,200 by the RCMP for cases involving credit card fraud. Meanwhile, industry insiders estimate that real estate fraud costs Canadians between $300 million and $1.5 billion a year.

"The onus is on homeowners to prove the crime and it can be very costly - financially and emotionally - to clear your name," said Leslie. "Unlike traditional forms of insurance, for a one-time premium, title insurance is an effective and inexpensive way to ensure title to your property is protected. Title insurance covers legal expenses related to restoring title and is available to existing home owners even if they have owned their property a long time."

Ms. Lawrence's troubles are the latest in a string of real estate title fraud cases across Canada. The Law Society of British Columbia, after four years of investigations, recently approved $32.5 million in payments to cover a multi-million-dollar real estate fraud case involving Vancouver lawyer Martin Wirick. The high-profile case involved transactions between 1998 and 2002 and affected hundreds of victims in the scheme. Other cases across the province include:
* A Mississauga man tried to sell his parent's home last year and discovered that someone had fraudulently sold the home for $400,000. The case was resolved after $11,000 in legal fees, but the fraudster is still at large.

* A Brantford woman received a call from a mortgage collector saying she was three months behind on her mortgage payments for a home she didn't know she owned. Later that night she also discovered that two other properties had been mortgaged in her name, leaving her on the hook for more than $400,000.

Visit www.ProtectYourTitle.com to learn how to protect yourself.

No comments: