(NC) Purchasing a new home is a big milestone that’s typically full of happy moments – from picking out new furniture and décor to discovering all the interesting spots in your new neighbourhood.
But this is also a time when homebuyers can be susceptible to mortgage fraud. According to a recent survey conducted for Chartered Professional Accountants of Canada (CPA Canada), only 35 per cent of people are aware of the dangers posed by mortgage fraud.
The first step in protecting yourself is to learn about the different types of this kind of fraud:
Title fraud. This can happen when someone forges or impersonates a homeowner to transfer the deed of the property to themselves. The scammer may then take out a loan against the home and keep the cash. This can leave you on the hook for your mortgage payments without actually owning your property. Title insurance can protect you against this type of real estate fraud.
Online cons. While most of us know not to click on random ads or spam emails, some of us may be deceived when looking for less expensive homes advertised online as private sales. You may be tempted to save on realtor commissions but beware of the risk of sending thousands of dollars to a dishonest seller who will never transfer the deed of the property to you. If you choose to go with a private sale, make sure you have a lawyer look over all documents carefully before signing anything or transferring any funds.
Deceitful brokers. As Canada’s mortgage lending laws tighten up with measures like the OSFI Mortgage Stress Test, more people are turning away from the big banks where they no longer qualify to secure a mortgage. But this can put you at risk of being scammed by a shady broker. Always make sure that the broker you are using is licensed. As an extra assurance, check local land registries and work with an appraiser to learn about the history of the property you are thinking about purchasing.