>Beware Mortgage Fraud

In early May 2010, a major story about the largest mortgage fraud in Canadian history hit the media. The Bank of Montreal filed a lawsuit in Alberta, alleging a $120 million mortgage fraud. According to the charges filed, a wide range of players, including bankers, lawyers, private citizens and maybe even elected officials may have been involved.

The complex fraud involved over-inflating mortgage values and hiring “straw buyers” – naive members of the public willing to pose as mortgage-seekers – to sign up for the loans. The scheme left several banks, not to mention a few unwitting home buyers, reeling from the financial hit.

Mortgage fraud is all too frequent. Unfortunately, it often strikes a single homeowner at a time – a homeowner who may not be aware anything is amiss until they're on the hook for hundreds of thousands of dollars.

Here's how it could happen:

Armed with your personal and banking information – retrieved from your mail box, for example – an identity thief shows up at a mortgage broker's office and asks for a second mortgage on your home, in your name. You have a good credit rating, and the mortgage is approved. The thief walks off with the money; you don't know anything about the second mortgage until months later, when a collections agency comes looking for missed payments.

There have also been cases of homes being sold right out from under the current owner's feet.

Unfortunately, given the high prevalence of fraud in Canada today, not all these crimes are investigated. CBC interviewed former RCMP officer Chris Mathers about the BMO fraud. "There just aren't enough police officers to investigate these crimes," Mathers, now a Toronto-based corporate crime consultant, told CBC. Fraud is rampant in Canada, he continued, and police forces are already swamped.

If the police don't have the resources to chase down the crooks, what's a homeowner to do?

Be vigilant. Keep an eye on your credit report and watch for suspicious changes or new accounts opening. Monitor your bank and credit card statements.

Adopt healthy habits to protect against ID theft.

Monitor your identification. No matter how careful you are, your identity is at risk. You just never know when, for example, a government or retail database may be compromised.  

More tips

The Government of Alberta suggests homeowners watch out for the following mortgage fraud red flags:

  • Someone offers you a fee to use your name and credit information to obtain a mortgage
  • You are encouraged to include false information on a loan application
  • You are asked to leave signature lines or other important areas on a loan application blank
  • The loan amount on the mortgage is significantly higher than the value of the property
  • The mortgage has been refinanced several times and in each instance, the amount of the mortgage has increased
  • The seller or investment adviser discourages you from seeing or inspecting the property you are offering to purchase

With common sense habits and the additional protection offered by Protection Power's range of benefits, you have your best chance of preventing mortgage fraud.

 

GET STARTED NOW!