Other articles by Nick and Christine
Identity theft occurs when someone impersonates you without your consent, and usually without your knowledge, with the intention of committing fraud. The usual result is that you are asked to pay for goods or services that you never ordered or enjoyed. Often an overdue bill or notice that your mortgage is in default is your first clue that you have been fraudulently impersonated.
How do thieves manage this? It is relatively easy to accomplish because personal information is available from many sources and credit is readily granted. It is possible to get information without stealing: phone book listings offer name and address plus phone number, recycling bins often have bills or employment information, or just looking in your driveway. Using very simple methods a not very clever thief can assemble an impressive dossier on an individual, and on their home and property.
If you add a few simple thefts, such as snatching your mail, making a few persuasive phone calls, or sending a few change of address cards, a thief can now have access to credit card information, banking documents including returned cheques or RRSP reports, property tax assessments and bills, or any number of other personal documents and information. Your mail doesn't even have to be permanently stolen, only "borrowed" for a few days then returned carefully resealed.
If the thief is capable of forging a few documents, or has some friends who can provide "references" then the false identity can be quite elaborate and convincing. A thief can build a credible identity over a relatively short period of time.
Sometimes a thief will have access to stolen credit information, such as in the case of the Winners information thefts. Usually in such cases an organization is behind the thefts and can move quickly to produce fraudulent credit cards or other documents, and quickly build up debt before they are discovered.
The internet has simplified life for a number of thief. They simply send you an email and ask you for personal information or rather trick you into giving them information. Phishing is alive and well! Often posing as banks, paypal, ebay, or any number of other known companies, a thief will send you an email or will direct you to a website that appears real. You are asked to provide some information, and you, trusting that you are responding to your bank, willingly give it. Voila!
What can you do to protect yourself from all this?
There are a number of steps you can take. None will completely protect you but together they can greatly reduce risk.
- Don't make personal papers available by shredding them before you recycle. (Be careful about shredders they can hurt you or your pets, but that's another story.)
- Don't leave personal papers out if you have lots of people coming into your house.
- Check your credit card charges. When your bill comes in check it out carefully.
- Check your statements in the same way. Do you recognize all the withdrawals?
- Get rid of credit cards you are not using, and close accounts that are not necessary.
- If you don't get a bill when you expect it don't just think they forgot! Call and ask. (I know it hurts)
- Go to Equifax and ask for your credit information, its free by writing and cheap by internet. If anything is strange then question, quickly!
- Guard your PIN's and passwords. Chose slightly more complicated passwords and don't always use the same ones! If you share a computer with several people or if your computer is left in the open don't let the computer automatically save passwords for you. In some cases it is very simple to access the passwords.
- Don't give out personal information online to someone "updating" their records.
- If you can, reduce the number of important papers you get by mail if its easy for thieves to access your mail. Bills can often be directed to online banking accounts.
- Protect your passport, Social Insurance number, Drivers License, Car ownership, Tax Information
- Consider mortgage insurance, or title insurance. Clearly understand the coverage.
- If you move make sure your mail is forwarded to you. Its worth paying the post office forwarding charge to send your mail on.
- Generally be aware of who has access to your information, make sure that the information that is available is accurate.
- Try to deal with people you trust.
- Don't agree to be the up front guy for a quick fee, you could be involved in fraud
- Nick Boothby NEVER gives out, or worse sell, personal information he collects. Some however do. Organizations such as the Opera sell their mailing lists.
- On the internet, it is common to register in order to have access to a site. In such cases there is usually a little box at the end allowing the site to send you stuff, or allowing them to send you "offers". Make sure it is not checked unless you want to receive info from the site. It often is checked by default.
Mortgage fraud occurs when a mortgage (or mortgage insurance) if given based on deliberately inaccurate, incomplete, or missing information. Usually there is intent to defraud. Sometimes there is no intention to defraud and the only intention is to get a mortgage which would not otherwise have been granted.
There is a great number of different forms of mortgage fraud.
- Sometimes its a simple case of identity fraud. A thief applies for a mortgage against a property under a stolen identity, then disappears with the money. Real owner of the property is left with a mortgage to pay which he did not arrange.
- Sometimes a real mortgage is obtained using fraudulent documents, such as a false power of attorney.
- Often mortgage fraud is the result of inflated valuation done on a property, and a mortgage being obtained based on this unrealistic value. The false valuation can be the result of fraud, or not following due diligence on the part of the person/organization responsible for establishing the value of the property.
- Some fraud is done using phony sellers or purchasers.
- Other frauds are aimed at people facing foreclosure and desperate to keep their home.
Thieves have shown a great deal of imagination and creativity in obtaining money from fraudulent mortgages.
If title to Real Estate is transferred by fraudulent means, it is usually possible to have it reversed, in other words if a fraudulent registration on the title was made showing title going to someone not the real owner, then courts will usually invalidate the sale or registration.
Unfortunately for the victims of mortgage fraud (real owners, mortgage providers, buyers, insurance companies) under current law, it is often not possible to have a fraudulently obtained mortgage invalidated and money returned.
Having a mortgage invalidated is more complex and courts have not automatically annulled fraudulently obtained mortgages. Usually it is necessary to show that the mortgage was granted by a negligent lender not showing due diligence in verifying the information, or not getting a proper valuation. If this cannot be shown then the mortgage is allowed and the poor victim is responsible for the mortgage.
Title insurance will only reimburse damages in very limited cases, and this is also the case for mortgage insurance. The title registration also carries a guarantee but as with other types of insurance, there are limitations. Make sure you understand the limitation on any kind of of insurance; it might cover some cases of mortgage fraud but not others.
Because our criminal system concentrates efforts on proving guilt rather than helping victims, prosecution is not all that helpful to victims of Mortgage Fraud, and penalties, when a conviction is achieved, are not a great deterrent to thieves, at this point Mortgage Fraud is still a profitable activity with woefully small penalties.
Even in the case where mortgages are invalidated, it is often not possible for the victims to recoup their legal costs.
There are a number of reasons Mortgage Fraud is increasing:
- The speed with which a mortgage is arranged facilitates fraud. Often no more than a couple of days, it doesn't give the lender much time to arrange for proper valuation, checking of the applicant's credentials, and just making sure the transaction is good.
- Because the Real Estate market has been very buoyant and we have seen rapid property value increase it is sometimes hard to identify an unreasonable valuation obtained fraudulently from an honest true valuation. Valuations done quickly from electronic documentation cannot replace an on site visit from an experienced professional. This also has the advantage of tipping you off if someone is looking to sneak a mortgage on your home.
- Many transactions are now done using electronic means, with fewer person to person transaction. If there are dishonest people in the process it is easier to miss them. Also if someone has "broken" into the system or stolen identities it is more difficult to identify problems.
This increase in Identity theft and mortgage fraud is of great concern to the various parties involved with property buying and selling, mortgage and financing, lawyers, valuators, etc. and a great deal of activity has been going on to address problems and help practitioners identify cases of mortgage fraud.
All groups have increased the level of training for their members. This training often includes ways of recognizing potential fraud. Procedures are being changed and documents issued to help identify suspicious conditions.
Governments are modifying laws, and the courts are struggling with how to deal with the problem. Banks are training staff and modifying procedures, all levels of Canadian real estate organizations are educating practitioners, Law society of Upper Canada has issued papers on the subject and produced lists of warning signs to help lawyers identify suspicious transactions. Appraisal Institute of Canada has issued information to appraisers, etc..
On the left are a number of links with articles and examples of what various organizations are doing.