In November, Toronto police said a woman used fake ID to get a $300,000 mortgage. The unsuspecting homeowner only discovered a mortgage had been fraudulently registered on their home when they received mortgage documents in the mail.
This is not a new scam. It’s happened many times in the past. Here’s a big one from 2010 that involved $140million and hundreds of people. This one was huge. Most are not this big or elaborate. It’s the smaller ones, like the recent one for $300,000, that are more common place.
HOW IT’S DONE
At the risk of advocating or promoting fraud, I’ll just share the fine points.. A title search is done on a house.. usually in mature neighborhoods where elderly are living and it’s more likely a mortgage will have been paid out. Title searches are cheap and all that info is public knowledge.
The crooks will then present false ID to a banker or broker and request a mortgage. They will usually get a small mortgage in relation to the value of the house. Using fake income docs, they will proceed to get the mortgage approved and advanced through a lawyer. The lawyer will verify the ID (if it’s fake, it’s hard to determine) and close the transaction. The crook walks away with the money. The real homeowner gets a letter requesting their monthly payments from the lender, and now the fun begins.
The unsuspecting homeowner has to go through quite a process to prove their innocence and then has to spend quite a large amount of money on legal fees to get the mortgage removed. It’s quite a headache. A headache that can be avoided easily.
HOW TO AVOID MORTGAGE FRAUD
It’s easy. Just register a mortgage on your house. I don’t mean borrow money just for the sake of preventing mortgage fraud. You can take out a secured line of credit that will be secured by a collateral mortgage charge registered to your home. If you don’t use the line of credit, you pay no interest. The crooks will see that you have a mortgage charge registered and will most likely leave you alone and go on to the next victim.
HARDER TO GET A SECURED LINE OF CREDIT WITH THE NEW MORTGAGE RULES
And yet another consequence of the new mortgage rules that begin January 1st. Qualifying for a secured line or credit or mortgage, has never been harder. In order to qualify for a secured line of credit, you must go through a very strict underwriting and qualifying process made tougher with the new qualifying rate.. You must qualify on the contract rate plus 2%. If your rate is Prime + 0.50%, that’s 3.70% + 2.00% = 5.70%. And you must use a 25 year amortization.
(you can thank your Federal govt for this… don’t get me started.)
To understand more and to find out what your best options are, contact an experienced Mortgage Broker for advice and consultation. A good Broker is always happy to help and offer advice.
Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.
Steve Garganis 416 224 0114 firstname.lastname@example.org
As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.