Trish Bongard Godfrey

Identity Theft and Mortgage Fraud: What You Need to Know

14 July 2015
Trish Bongard Godfrey

On a recent Netflix night with my husband, I watched the movie “Identity Thief”, starring Melissa McCarthy. In the movie, McCarthy’s character cons a man out of his personal information and uses it to spend wildly and commit crimes. It was a funny take on a very serious problem.

Last year, over 20,000 Canadians were victims of identity fraud, according to the Canadian Anti-Fraud Centre. Working in real estate, I have to be aware of the risks of identity theft and real estate fraud – and my clients need to know how to protect themselves.

There are two common types of real estate fraud. The first kind, fraud by forgery, occurs when a fraudster uses forged documents to transfer a property into their own name and then obtains financing on that property. The second kind, fraud by impersonation, is when someone obtains a mortgage by using false identity documents to impersonate the real homeowner.

In both cases, the fraudster takes the mortgage money without making any payments, leaving the unsuspecting real homeowners to deal with the mess of default and foreclosure.

Both types of fraud involve identity theft – the perpetrators first need to obtain your personal information in order to pull off the fraud. The most important step you can take to prevent real estate fraud is to protect your personal information.

Here are some tips:

  • Never give your personal details on the phone or Internet unless you’ve verified the recipient’s identity. 
  • Ensure websites that ask for your personal information are securely encrypted. (A good sign is if the site address begins with “https”.) Avoid inputting personal information on a public or shared computer.
  • Destroy documents with personal information instead of throwing them away.
  • Don’t carry any more identifying documentation than you need in your wallet or purse. Keep important documents (like your SIN card) stored safely at home.

How can you stay alert to the possibility of identity theft and mortgage fraud? Watch for warning signs like these:

  • Misdirected mail. If your bills aren’t arriving, it could mean someone has taken over your account and changed the address. Similarly, if you receive mysterious bills or statements for financial services you didn’t purchase, you should be suspicious.
  • Unusual interactions with financial institutions. Follow up if your credit report does not reflect your understanding of your financial situation, or if you receive unexplained calls from collections agencies.
  • Offers too good to be true. I can tell you from experience that real estate investment is hard work…so if someone offers you a way to make quick money in real estate, be on the alert for a scam.

When making any kind of real estate transaction, there are a few ways to protect yourself from possible fraud. The most important is to rely on reputable, licensed professionals to manage the transaction.

  • Obtain title insurance on your property, which will provide coverage for many real estate risks, including fraud.
  • Use a licensed realtor who is trustworthy and reliable, and who can provide references.
  • Have your own lawyer look over any documents involved.
  • Know and understand any documents you sign, especially ones containing financial details or agreements. When in doubt, ask for an explanation.
  • Be on the lookout for inconsistencies or omissions in documentation provided by the other parties to the transaction. Partial or inconsistent names, no photo ID, scanty contact details or missing signatures can indicate identity fraud.

Educate yourself further by reading more online information from the Canadian Association of Accredited Mortgage Professionals  or the Canadian Anti-Fraud Centre.