Mortgage Fraud Warning

Courtesy of RECO's "For the RECOrd" magazine

 

RECO investigators are all too familiar with mortgage fraud and the turmoil it causes for the victims who are left fighting to get their homes back. Unfortunately, in most cases, RECO only becomes aware of the mortgage fraud after the fact when a homeowner realizes they have been victimized. But on one recent afternoon, a tip from a brokerage helped RECO stop a fraudster in his tracks and save a senior from heartache.

“It had many signs of a mortgage fraud including someone misrepresenting themselves as a registrant in order to create the illusion of a legitimate transaction,” says RECO’s Deputy Registrar, Bruce Matthews. “But in this instance, we realized that we had an opportunity to act quickly and prevent a fraud from happening.”

It all started when a legal assistant at the Toronto law firm representing the supposed seller noticed irregularities in the real estate transaction. She inquired with Sutton Group All Po Realty, the brokerage that supposedly represented the seller. But Gail Fulton and Doug Lytle, staff members of the brokerage, were shocked to find that they had no record of such a deal. The pair quickly recognized the seriousness of the matter and immediately contacted RECO.

Within a few hours, the urgency of the investigation became clear as RECO’s Manager of Inspections & Investigations, Brian Prendergast, determined that the transaction was fraudulent and put a face to the fraud’s victim: an elderly minister who had no idea that a fraudster was trying to sell his house without his knowledge.

“Naturally he was shocked and alarmed,” says Prendergast. “We realized that this kind man could have his life turned upside down if he was forced to go through the exhaustive process of rectifying the title to the home he had lived in for over 30 years. Knowing what was at stake left us even more determined to do everything we could.”

Fortunately, it was not too late. Prendergast worked with representatives from Service Ontario’s Policy and Regulatory Services Branch to determine that the Land Transfer Office had indeed received and processed an application to transfer the title of the house and to register a $600,000 mortgage against the property. But, crucially, they had not yet certified the transfer. Once RECO informed them of the fraud they halted the transfer process immediately.

With RECO’s help, the homeowner returned the title to his name. He can now rest easy knowing his home is safe.

“I was surprised and shocked, but even in that first call Brian said everything would be okay,” says the homeowner, who has asked to keep his identity private. “Just an hour and a half later he phoned again to say everything was straightened out.”

While RECO’s quick work played a key role in preventing the fraud, numerous individuals from the brokerage, law firm and Service Ontario also deserve kudos for the roles they played.

“We owe a great deal of thanks to these individuals,” says Matthews. “They paid attention to their instincts and reacted quickly, allowing us to protect this gentleman from fraud.”

This potential fraud has a happy ending, exemplifying one of the ways RECO fulfills its mission to uphold the integrity of real estate transactions.

While RECO’s efforts prevented the fraudsters from making off with over half a million dollars, they remain at large. York Regional Police continue to investigate.

Tips to Avoid Mortgage Fraud:

Avoid being an unwitting participant in mortgage fraud. Be suspicious of situations where you are:

  • Asked to inflate (overstate) your income on a mortgage application, indicate you plan to live in a property being purchased as a rental property or provide other false statements.
  • Asked to sign documents that contain blanks or asked not to complete certain sections of a form or document.
  • Offered a fee for the use of your name and credit information.
  • Discouraged from visiting the property, having the property appraised or inspecting the property you are purchasing.

IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS!

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