Protect Yourself Against Real Estate Fraud and Identity Theft
There are many different types of real estate fraud, but the two that consumers should be aware of are mortgage fraud and title fraud.
Mortgage fraud occurs when an individual intentionally provides inaccurate, fraudulent or incomplete information to a lender in order to secure a mortgage that they might not otherwise be granted. This could include anything from an individual claiming to have a higher income than they actually have to providing falsified proof of identification or a falsified appraisal of the property.
Title fraud occurs when a fraudster assumes the identity of an individual homeowner and then uses that false identity to pose as the homeowner. They could then assume the title on the home, sell the property or obtain a mortgage on that property or other properties in the homeowner’s name.
Mortgage fraud is a crime that the banking industry, police, governments and other organizations involved in real estate transactions take very seriously. Although there is no central organization that collects statistics nationally the number of incidents is increasing dramatically.
Protect your personal information from identity thieves:
Incidents of real estate title fraud are increasing in Canada and homeowners and lenders are proving to be irresistible targets for fraud artists. The role of legal professionals and title insurance companies has become even more critical in the fight to detect and prevent title fraud.
This is an example of a fraudulent transfer and mortgage, but other types of fraudulent transactions also occur:
Homeowners and lenders can protect themselves by obtaining a title insurance policy. The coverage provided in residential title insurance policies helps protect both innocent homeowners and lenders who might otherwise face huge financial losses resulting from title fraud. Generally, the losses from these types of frauds are catastrophic with homeowners paying thousands of dollars in legal fees to defend their title, and lenders often losing the full amount of their mortgage. Title insurance can protect both homeowners and lenders against losses resulting from most forms of real estate title fraud.
It is Important to note that thieves often target properties that are mortgage free and where owners have a good credit rating. This allows them to apply for a significant mortgage.
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