The start of 2023 has seen an uptick in fraudulent activity
One of the most troubling trends in the Canadian housing market during the opening months of 2023 has been a spike in title fraud, with criminals impersonating homeowners in an effort to sell their properties and pocket the ill-gotten gains.
In late January, The Canadian Press reported that Ontario and British Columbia had seen 32 instances of property fraud cases involving individuals posing as owners with a view to either selling a property or securing another mortgage on it.
While mortgage fraud has long pervaded the market, title fraud that results in the sale of a property is a more recent but increasingly common phenomenon, according to the legal counsel of a title insurance giant.
John Tracy (pictured top), of FCT, told Canadian Mortgage Professional that he had noted a recent uptick in instances of attempted property sales through title fraud.
“Certainly [I’ve] seen over the years a lot of mortgage fraud where the identity of the owner is stolen and the property is mortgaged, but a [recent] sort of surge in where the identity of a property owner is stolen, and then it is sold,” he said.
“That’s not brand new – there have been cases of it previously – but never to the extent we’re seeing now.”
It would be difficult to identify a single factor behind that sudden upswing, Tracy said, although he noted that varying levels of coordination appeared to be at play in recent cases, including the involvement of organized rings and concentrated efforts.
“I know that for sure because we’re seeing ID used in one fraud that is also used in another. So in one case, we had a person posing as a tenant and then in the other case, he posed as an owner,” he said.
“And from the identification, the picture, it was clearly the same person. So I think that shows you that there must be higher levels of organization.”
Did the COVID-19 pandemic play a part?
The onset of the COVID-19 pandemic is often heralded with having brought about a profound transformation in how business is conducted across many sectors, and in the mortgage space technology is credited with helping shift the signing stage from an in-person process to a digital one.
It may be a hunch, but Tracy also said that the growing prevalence of virtual signings with lawyers and real estate agents could have convinced some would-be title fraudsters that it would be easier to carry out their schemes with a physical meeting not required.
“I can’t say for certain on that – but it’s easier, I think, to pull off a fraud when you’re behind a computer screen as opposed to face-to-face with somebody,” he said. “It still does happen, face to face, but I think that’s also one of the reasons why we’re seeing this uptick.”
In one instance of attempted fraud, Tracy said a lawyer recorded a Zoom meeting with an individual he had been told was the seller of the property. However, the person on the other side of the screen was actually a fraudulent actor who seemingly knew what they needed to know and do to appear legitimate and pull off the heist.
Those cases are likely to involve greater levels of organization and sophistication than others, Tracy said, with the individual appearing on camera probably not the “masterminds” of the operation. They may, for instance, be in need of money or a one-off payment, meaning they’re willing to take the risk of appearing on camera or having their image in a lawyer’s files.
How sophisticated are title fraudsters in Canada?
A “high level” of sophistication is often apparent in instances of title fraud where a property sale is concerned, Tracy said, with multiple parties usually required to play a role to perfection in order to pull off the scheme.
“Stealing the identity [is] not necessarily easy: creating fake ID, learning about the person so you’re [able] to answer questions,” he said. “But then posing as them, seeing a lawyer, hiring a real estate agent – and often part of the scam, as well, is renting it out.
“So finding tenant accomplices, the tenants will have access to the properties because most people, when they buy something, they want to tour through it first. So to me, that’s just so many different players involved, and they’ve all got to do the right thing to pull it off.”
Have you seen any recent examples of attempted title fraud? Let us know in the comments section below.
