You may have seen advertisements warning you to be aware of phishing schemes and other scams. In the past week, I have received fraudulent emails claiming to be Shaw Cable, RBC and even the FBI. These are easy to spot because of mistakes in the letterhead, spelling mistakes and formal language that would fit in well in the 19th century. What is not as well-known is mortgage fraud. Fraudulent mortgages cost lenders every year. These losses result in higher costs and interest rates for consumers – so fraud ends up costing all of us money. What types of fraud should you be aware of?

Fraud for Shelter – this is when an applicant gives false information concerning their income or job status in order to obtain a mortgage to buy a home. While they may plan on paying off the mortgage in full this is still fraud. Another form of fraud is when you sign a declaration at the lawyer’s office saying that you will be living in the property when you have no intention of living there.
Fraud for Profit – a friend says they know someone who needs to buy a house now but their credit won’t be satisfactory for another 3 or 4 months. They ask you to say you are the buyer and provide your credit history in exchange for $5,000 for your trouble. The problem for you the “straw buyer” is when they flip the home and run off with the profits leaving you on the hook for a mortgage and having to deal with legal authorities as well.
Foreclosure Fraud – a fraudster approaches a homeowner who is in financial trouble with a debt-consolidation scheme that involves the owner paying an upfront fee and signing over title to the home to the fraudster.
• the home owner receives cash from the fraudster to address immediate bills and remains in the home paying “rent” or “consolidated debt payments” to the fraudster
• the fraudster pockets all of the owner’s payments and ignores bills and taxes, which leads to debt-collection procedures against the owner
• the fraudster may re-mortgage or sell the property to an accomplice, leaving the owner without the property title, homeless and still in debt

Title Fraud – This is when someone forges your identity and either sells your property or takes out a mortgage on the property. Buying title insurance for a home under $500,000 can cost you between $50 and $175 and covers any legal fees you have to pay to regain your property.

Courtesy of David Cooke – AMP – DLC Jencor Mortgages in Calgary, AB.