Types of Real Estate Fraud
Title fraud starts with identity theft, which occurs when your personal information is collected and used by someone identifying themselves as you. There are many ways your identity can be stolen without your knowledge – including:
- Dumpster diving – going through trash to find documents.
- Mail box theft – stealing confidential information from doorsteps.
- Phishing – posing as a legitimate website with the intent of defrauding online visitors.
- Computer hacking – breaking into someone’s personal information on their computer without them knowing.
- Skimming - using a data storage device to capture the information at an ATM or during a merchant transaction.
- Finding personal information you share on the Internet.
- Stealing your wallet or purse.
Title fraud occurs when a stolen identity is used to assume the title of a property and sell the home or get a new mortgage. For example, if you already own a home, a criminal could fraudulently discharge your current mortgage, transfer the title, secure a larger mortgage and put the home under their own name.
Once the money from the sale or new mortgage is advanced, the criminal can leave with the money. You might not be aware of the fraud taking place until after it has been committed. You may find out once the mortgage lender contacts you about mortgage payments you have not made, or someone knocks on your door claiming to be the new owner of the house.
Foreclose is the legal process where a mortgage lender takes possession of a consumer’s home and sells it to cover the mortgage debt the consumer has incurred but has been unable to pay.
In a near foreclosure situation, a criminal will take advantage of the situation by offering the homeowner a loan to cover expenses and consolidate loans, in exchange for up-front fees and an agreement to transfer the property title to the criminal.
The criminal could also sell the house or re-mortgage it and leave with the money. In the end, the homeowner will lose the house and still be in debt.
*Source Financial Consumer Agency of Canada