A few years ago, title fraud – previously unheard of – suddenly became a homeowner’s worst nightmare, as people discovered that their homes had been stolen from out beneath them. Fraudsters would steal a person’s identity, take out a new mortgage on a property, and then flee with the money. The homeowner would only find out something was wrong when collection agencies started calling about overdue payments on a mortgage they’d never asked for.
While statistically rare, mortgage fraud still happens. Here’s how to avoid it.
Prevent ID Theft
Title fraud begins with identity theft, so you should do everything you can to prevent it. The main thing to do is keep your private information private. Your employer is the only person you should trust with your social insurance number (SIN). Don’t use easy to decipher digits – such as your birth month and year or home address – as your PIN code for your bank and credit cards. Shred any financial records or documents before disposing of them. Only use secure computers for online banking and be sure to clear your cache.
Check In With Your Credit Rating
It's important to periodically check your credit rating for unusual activity. There are two credit reporting agencies in Canada: Equifax and TransUnion.
There are two credit reporting agencies in Canada: Equifax and TransUnion. Each is required to provide you with a free copy of your basic report if you request it, or you can pay for a more detailed version. Rates vary from $15.50 for a one-time copy, or $15–17 a month updated access that includes an identity theft insurance policy.
Take Out Title Insurance
When you own a home, you own title to the property that it sits on. Buying title insurance during the closing process is the one sure way to protect yourself from title fraud and a host of other title-related risks.
With a valid title insurance policy in place, you’re protected from any legal costs arising from an attempted mortgage fraud and, most significantly, you won’t risk losing your home.
Title insurance also protects you from costs relating to any defects with the existing title, such as an error in the land survey, or structures on the property that encroach on the required setbacks.
Depending on the value of the property, you can purchase title insurance for a one-time fee of about $300 to $500, and it’s good for as long as you own the property. Some policies even extend to family members who inherit the home.
Homeowners who’ve already paid off their mortgage can also buy title insurance policies to prevent loss.
Signs Your ID Has Been Stolen
Indicators to watch for that may tip you off to potential identify theft include:
- Your credit card is inexplicitly declined
- You start receiving credit card or other bills in your name that aren’t yours
- Credit cards or other bills you are expecting don’t arrive in the mail
- You start getting calls from collections agencies
If you suspect someone has stolen or compromised your identity, there are a number of organizations you should contact including:
- Your local police department.
- The Canadian Anti-Fraud Centre
- Your mortgage provider (and bank if they’re not the same).
- The two credit agencies, Equifax and TransUnion
