As mortgage fraud cases continue to increase in Canada, homeowners and lenders have been heavily targeted by fraudsters. As a result, innocent homeowners and lenders are often faced with long legal battles resulting in huge financial loss. Mortgage fraud consists of many forms, generally involving title transfers obtained through fraudulent transfer documentation (deed) and fake identification. Once the property is transferred to the fraudster, a mortgage is obtained and registered against the property. Once the funds are transferred and the fraud artist receives the money, he/she will vanish and the legitimate homeowner is served with a notice from the lender that it intends to sell the property due to mortgage default. Target properties often include mortgage free properties or those with substantial equity permitting the fraudster to apply for a bigger mortgage. The above is just an example of a fraudulent transfer/mortgage, but in reality there are many more. The consequences of fraud can be catastrophic to homeowners and it is highly recommended that homeowners purchase title insurance each time a property is acquired. This insurance provides coverage against the following:
- violations of municipal zoning by-laws
- encroachments onto an adjoining property (other than fences and boundary walls)
- setback violations
- realty tax arrears
- outstanding municipal utility charges, provided such charges form a lien on title
- existing work orders
- lack of legal access to the property
- unmarketability of the land due to adverse matters that would have been revealed by an up-to-date survey / RPR/ Building Location Certificate
- fraud, forgery and false impersonation to the extent they affect the validity of title
Title insurance is purchased for a one-time premium and coverage is provided for the entire time the homeowner owns the home and the lender holds the mortgage.
John Gaio is a brampton real estate agent specializing in brampton homes for sale and highly recommends all homeowners to consider purchasing title insurance. Homeowners should contact their lawyer/notary who can arrange to obtain title insurance. For those wishing to receive additional information on title insurance, go to http://www.johngaio.com/buying_tips.insurance.JohnGaio or email me with any further questions or concerns. After all “Helping You Make Intelligent Decisions” is what I do.