Did you know? March is Fraud Awareness Month. Protecting yourself and your mortgage from fraud is crucial to safeguard your financial well-being. Understanding some of the more common mortgage fraud scams and how to protect yourself can make all the difference!

The most common type of mortgage fraud involves a criminal obtaining a property, and then increasing its value through a series of sales and resales involving the fraudster and someone working in cooperation with them. A mortgage is then secured for the property based on the inflated price.

Below are some red flags to be aware of as potential lead-ins to fraud:

• If someone offers you money to use your name and credit information to obtain a mortgage
• If you are encouraged to include false information on a mortgage application
• If you are asked to leave signature lines or other important areas of your mortgage application blank
• If the seller or investment advisor discourages you from seeing or inspecting the property you will be purchasing
• If the seller or developer rebates money on closing, and you don’t disclose this to your lending institution

Another fraud scheme to be aware of is title fraud. Title fraud is essentially a form of identity theft and is typically discovered when your mortgage mysteriously goes into default and the lender begins foreclosure proceedings.

With title fraud an individual, who is using false identification to pose as you, will register forged documents transferring your property to his/her name. From there, they register a forged discharge of your existing mortgage and get a new mortgage against your property. Then the fraudster makes off with the new home loan money without making mortgage payments. The bank thinks you are the one defaulting – and your economic downfall begins.

But don’t panic! There are lots of ways you can protect yourself from title fraud:

• Always view the property you are purchasing in person
• Check listings in the community where the property is located – compare features, size, and location to establish if the asking price seems reasonable
• Make sure your representative is a licensed real estate agent
• Beware of realtors or mortgage professionals with a financial interest in the transaction
• Ask for a copy of the land title or go to a registry office and request a historical title search
• In the offer to purchase, include the option to have the property appraised by a designated or accredited appraiser
• Insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house or meth lab
• Ask to see receipts for recent renovations
• When you make a deposit, ensure your money is protected by being held “in trust”
• Consider the purchase of title insurance. While title can be purchased after taking possession or years later, the best time to purchase a title insurance policy is NOW before an issue like fraud is discovered.

Remember, being proactive and vigilant is key to protecting yourself and your mortgage from fraud. If you suspect fraudulent activity, act promptly to mitigate potential damage and report it to the appropriate authorities such as the Canadian Anti-Fraud Centre.