Preventing Title Fraud

The stories can be chilling.  People finding out that they have become victims of title fraud when a financial institution calls to inform them that they’ve lost their house due to a foreclosure on a mortgage they didn’t even know existed.  One estimate suggests that damages from title fraud in Canada amount to between $400 million and $1.5 billion a year. 

 

 

 

 

 

Title fraudsters typically use one of two methods to steal title.  The first starts with stealing an identity and using either stolen or forged identity documents to apply for a mortgage on a property.  The second involves using forged documents to first pay off a mortgage or lien, then transfer title and finally to apply for a new mortgage in the new name.

So how can one prevent title fraud?  Here are a few tips to reduce your chances of being victimized.

1. Protect your identity.  Thwart dumpster diving criminals by shredding all bills and statements before discarding them.  Immediately report any lost or stolen credit cards and monitor your statements for unauthorized activity.  Request your credit report regularly and review it. Be careful online.  Close browser windows completely after logging out of financial transactions.  Only provide credit card information on the secure sites of reputable businesses.  If in doubt, don’t take a chance.
   
2. Purchase Title Insurance.  Title Insurance has come into being to protect consumers in the event of a title fraud or any other title-related issue. Policies cost $350 to $1,000 depending on the value of the home.
3. Maintain your own credit on the property.  (Not everyone agrees with this approach, but I don’t see how it hurts.)  The theory is that if you keep your property tied up as security on a loan, in other words giving a lender a claim against title, a fraudster is less likely to target you.  Fraudsters are much more likely to target people who own their home outright.  If you pay off your mortgage, consider opening a home equity line of credit.  You don’t pay any interest if you don’t use the LOC, but it can tie up up to 80% of the value of your home making it unattractive to title thieves.

If you have any questions or would like more information about Preventing Title Fraud, please call me at 905-822-6900 or email me at Stephanie.Hebb@RoyalLepage.ca.