How You Can Lose Your Home To Title Fraud

ID theft can lead to title fraud

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

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3 thoughts on “How You Can Lose Your Home To Title Fraud

  1. Hi Allan,
    Thank you for the article. As I read it I still have some questions. In the article you mention “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.” which I did buy title insurance (because the lender is requesting it). Later in the article you mention “Homeowners who’ve already paid off their mortgage can also buy title insurance policies to prevent loss.” which seems a little confusing to me because I already purchased title insurance when I got the mortgage but in time I paid off my mortgage in full. Now I have to purchase again title insurance OR the old one is still valid. In other word, the title insurance was tied to the initial mortgage OR only to me and the property regardless of the mortgage being paid off or not. Can you please clarify?
    Thank you,
    Alex

    • Hi Alex,
      Thanks for your question! I’ve sent this over to Allan’s attention – I’m sure he’ll be in touch with more info soon.

  2. Hi Alex
    The residential homeowner’s title insurance policy stays in place for as long as the insured owner holds title to the property. So you don’t need to buy a new policy when your mortgage is paid if you already have a residential policy. I read Allan’s blog as indicating that you can still buy a title insurance policy even if you did not purchase it when you initially bought the house. These are referred to as existing homeowner policies.

    Also there is a lender title insurance that the homeowner will pay for on the mortgage transaction often in lieu of a survey -which can lead to a less costly and quicker closing. The lender policy protects the enforceability, priority and validity of the lender’s mortgage. The lender and homeowner policies are often bought at the same time when the homeowner is closing and included in their lawyer’s fees.
    The lender policy stays in place for as long as the mortgage (new mortgage, renewal or re-finance) remains on the property. There is no impact on the status of the residential homeowner’s policy when the mortgage is paid in full and the lender policy ends- the homeowner’s policy still remains in place for as long as the homeowner has title to the property.
    I hope that answers your questions

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