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If criminals steal your identity, they can take out a mortgage in your name—or even sell your home! Here’s how to reduce your risk of mortgage fraud.
This is part of a series of columns about how to protect important information and people in your life against fraud and scams. Stay tuned for more.
As assets go, you would think real estate is uniquely resistant to theft. After all, it’s not like cash or a vehicle; no one can run off with it. But real estate can be leveraged for financial gain. That’s why Canadians have to contend with crimes such as mortgage fraud and title fraud. Here’s how they work, and how to protect yourself.
The most common form of mortgage fraud in Canada is what’s called first-party fraud: A mortgage applicant misrepresents aspects of their financial affairs when they apply—for example, by claiming a higher income than they really earn or by failing to disclose debts.
“They’re not pretending to be someone else,” says Carl Davies, head of fraud and identity at Equifax Canada. And the targets of first-party mortgage fraud are lenders, not consumers. Still, Canadians as a whole suffer as a result, as the costs of first-party fraud get passed on to them through higher financing costs.
What Canadian consumers need to watch out for and protect themselves against, however, is third-party mortgage and title fraud. This is when a fraudster pretends to be you in order to apply for a loan in your name, using your home as collateral. They could also assume the title of your home so they can re-mortgage or sell it—even without you knowing.
This crime can have serious consequences for your finances now and into the future. You may face claims from lenders to service or repay funds borrowed. The impact on your financial identity can harm your credit score and affect your ability to obtain credit. Cleaning up the aftermath of fraud with financial institutions and law enforcement takes time and effort. It may take months or years to get your financial health back on track.
Protecting yourself against mortgage and title fraud begins with understanding how it typically unfolds.
“Identity theft is usually the precursor to this kind of fraud,” Davies says, which explains why mortgage fraud is becoming a bigger concern in this digital age. “The ability for people to commit identity theft now is easier than it has ever been.”
The advent of generative AI has enabled fraudsters to convincingly falsify or create fraudulent documents, and even impersonate property owners with deepfake audio and video. And because mortgages represent one of the largest sums of money any of us ever have access to, it’s a leading way for criminals to profit from identity theft.
The bad actors might obtain pieces of your “tombstone information”—name, address, date of birth—through tactics like email and text phishing scams, or by scouring your social media posts. They can also look for more information about you on the dark web (hidden websites where criminals can buy and sell stolen data).
Fraudsters often exploit people’s identities over several years. Often, they start small by applying for secured credit cards in their victims’ names with just a $1,000 credit limit, and then watching the credit limits rise over time.
“All of this is often done without the knowledge of the consumer,” Davies notes. A fraudster may open a credit card account under your name—and perhaps a full mortgage or home equity line of credit—using their own phone number and email address, so you won’t be contacted by the lender until it’s too late.
Here’s how to protect yourself from becoming a target of mortgage fraud.
Equifax Complete Protection is a credit and cybersecurity protection service designed to help Canadians spot the signs of identity fraud faster.
Subscription price: $34.95 per month
If you think you may be a victim of identity fraud, including mortgage or title fraud, act fast. Here’s what to do:
An even better way to avoid mortgage fraud and title theft, along with other forms of digital fraud, is to subscribe to Equifax Complete Protection. This suite of monitoring and identity protection tools helps keep your personal data and devices safe, and helps you monitor your credit and ID.
Features of Equifax Complete Protection include:
If your identity is stolen, an Equifax identity restoration specialist will help you recover it—plus you can get up to $1 million in identity theft insurance (not available for new purchases in Quebec). Equifax Complete Protection costs $34.95 per month—a modest price to pay for peace of mind. To learn more, visit the Equifax website.
This is a paid post that is informative but also may feature a client’s product or service. These posts are written, edited and produced by MoneySense with assigned freelancers.
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