Mortgage Fraud Awareness

The promise of a quick profit in real estate can be hard to resist. But consumers who misrepresent information when buying or refinancing a home could end up being responsible for any shortfall when the property is sold. If the misrepresentation is intentional, they could also be held criminally responsible as accomplices to mortgage fraud. The most common form of mortgage fraud, called straw buying, occurs when someone with good credit is convinced to put their name on a mortgage application for a home that someone else will be buying, usually in return for the promise of a quick profit. To protect your name, credit and family, Canada Mortgage and Housing Corporation (CMHC) offers the following tips on how to avoid becoming part of a mortgage fraud scheme:

• *Never accept money, guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property. If you allow your personal information to be used for a mortgage, even for a brief period, you could be held responsible for the entire debt even after the property is sold.
• *Always know who you're doing business with. If you're buying or selling a home, use only licensed real estate agents/brokers and other industry professionals. And never sign anything until you know exactly what you're signing.
• *Determine the sales history of any property you're thinking about buying, and consider having it inspected and appraised. Ask for a copy of the land title search, and find out if anyone else has a financial interest in the home. If a deposit is required, make sure the funds are held "in trust" by the vendor's realty company or lawyer/notary.
• *Get independent legal advice from your own lawyer/notary. Talk to your lawyer/notary about title insurance and other alternative methods of protection.

To protect yourself from identity theft, never give out your personal information until you know who you're dealing with and how your information will be used. Review your mail, bank statements and other financial statements on a regular basis for inconsistencies. Shred or destroy all personal and financial documents before you throw them away. And inspect your credit report on a regular basis by contacting Equifax Canada at www.equifax.ca and TransUnion Canada at www.transunion.ca. Most important, be wary of anyone who approaches you with an offer to make a quick profit in real estate. Remember: if a deal sounds too good to be true, it probably is. If you suspect that you or someone you know has been the victim of real estate fraud, contact your local police department immediately. For information on fraud prevention or any other aspect of owning, maintaining or buying a home, visit the CMHC website at www.cmhc.ca.