One of the most important steps in your due diligence process should be to validate property ownership information. If you don’t, you could be opening yourself up to potential mortgage fraud.
We’ve heard many stories about a mortgage broker performing a property ownership search, only to find that other people come up on the property title. Sometimes even the homeowners don’t realize that a co-signer was put on the title — for example, maybe they forgot they put their parents on the title.
Other times property owners do know that someone else is on the title, but they’re hoping to keep a deal secret from their co-signer. For instance, sometimes homeowners they think they can refinance their mortgage without telling their spouse and a spouse will come up on the property title search.
The third most alarming reason for a property ownership search is more malicious — property ownership fraud, where the title to a home is stolen, and then the fraudster sells the home or applies for a new mortgage against it. According to the Canadian Financial Consumer Agency, this type of title fraud usually starts with identity theft.
According to The Chronicle Herald, title fraud costs Canadians $300 million annually. Seniors, or those who have homes with paid-off mortgages, can be most at risk.
As a mortgage broker, you have a responsibility to execute due diligence to ensure to the best of your efforts that you’re not brokering a fraudulent deal. Validating homeownership information is one of the best ways to do this.
Some best practices:
- Check ID. You can confirm the authenticity of an Ontario driver’s licence by checking it against the Ministry of Transportation website
- Conduct a detailed title search. Pay attention to patterns of inactive or deleted instruments on the Parcel Register.* If something seems suspicious, such as a mortgage being discharged within six months preceding the closing date, dig deeper.
- Ask your clients about any discrepancies. It may turn out it was an innocent oversight and you are able to correct it, such as adding their spouse to the deal.
By taking the effort to perform a property ownership search and validating the title information, you end up looking more professional to both clients and lenders.
With your Purview report, validating homeownership has never been easier. You can quickly view the property details and property ownership information you need. You can confirm all owners on title and view the historical sales activity of the property. This will also let you spot overly inflated sales and pinpoint non-arm’s-length-transfers.
Not only will this help you prevent title fraud, but it will also enable you to move applications through the system faster with less time spent confirming details.
Purview is a valuable resource for various reasons – one of the most important being the prevention of real estate fraud. Call us today for more information at 1.855.787.8439 or visit www.purview.ca.