Fraud comes in many different forms and is a serious problem that Canadian lending and mortgage professionals face. According to CPA Canada, the three most common forms of fraud that Canadian homeowners, lenders and mortgage brokers face are mortgage fraud, title fraud and foreclosure fraud.
Kinds of real estate fraud
Mortgage fraud occurs when an individual tries to obtain a mortgage from a lender under false pretenses. A common form of this fraud occurs when an unlicensed player gets involved in the home-buying process and takes advantage of a homebuyer by charging them unlawful fees or inflated interest rates. In some extreme cases the fraudster may submit fraudulent mortgage applications.
Title fraud generally means that identity fraud has already happened as a fraudster will have stolen a homeowner’s personal information in order to fraudulently sell a home or apply for a new mortgage.
Foreclosure fraud commonly takes place when a homeowner has trouble paying their mortgage payments and are looking for assistance with the loan. They may look into non-traditional financing options for an additional mortgage or loan, which results in adding a fraudster to the title of the property. This fraudulent financer will usually keep the future payments and as they are on title will potentially attempt to resell or remortgage the home.
Fraud flags to watch out for…
As a mortgage professional, you may come across homeowners attempting to fraudulently obtain a mortgage. Recognizing fraud flags may help you stop a fraudulent deal from going too far. Here are some common fraud flags that can alert you to dig a little deeper:
- Price consistency – Has there been a big jump in the property’s value? Was the property recently sold for much less than the value stated on the application?
- Past transactions – Was the last transaction on the property a cash sale?
- Property ownership – Were past owners related somehow (non-arms’ length transactions)?
- Registered mortgages – Were mortgages discharged soon after a property changed hands?
How PurView helps mitigate fraud
PurView offers you easy and efficient access to authoritative property data, enabling you to learn everything you need to about a property, neighbourhood and homeowner. PurView reports give you access to ownership information, property value, registered mortgages and many other data attributes that can help you spot potential fraud early in a deal. The Ontario report also features a fraud check section, which runs checks on some common indicators of fraud and will alert you to any aspects of a property or its history which may require further due diligence to ensure fraud is not present.
PurView’s authoritative data can help you spot problems and build trust with your customers as you work to mitigate risk and close their deal efficiently and on time.
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