For many people, purchasing of a house, townhouse or condominium is one of the largest investments they make in their lifetime. Not only do homes provide a secure, familiar environment in which to live, but also a financial investment that can provide equity well into retirement years. But as with every industry, scam artists have developed a number of ways to rip off consumers and steal from their real estate investments.
Two types of fraud drawing media attention lately are mortgage fraud and title fraud.
Mortgage fraud is when personal information is fraudulently given to a mortgage lender, in order to secure a mortgage.
Title fraud is when someone falsely assumes the identity of a homeowner and uses that identity to assume the title, sell the property or to obtain a mortgage as the homeowner.
In both types of fraud, identity theft has taken place, and the victim is at risk of potentially losing hundreds of thousands of dollars.
Reverse Mortgage Scams
Reverse mortgages are a legitimate (yet often controversial) type of mortgage whereby older homeowners can cash in on the equity in their home without having to sell their property. Unlike a regular mortgage where homeowners borrow money on their home and repay it to the lender, with a reverse mortgage the lender pays the homeowner based on the equity in their home. This type of mortgage does not have to be paid back for as long as the homeowners live in their home.
Reverse mortgage scams occur when scam artists pose as businesses or financial institutions providing reverse mortgages. Scam artists often target seniors via telephone, collecting personal or financial information and either use the information to steal the senior's identity and money, or convince the seniors to pay a huge fee in order to "set-up" the reverse mortgage.
The Right Person for the Job
Many real estate-related scams begin when homeowners fail to ensure the person they hire to renovate, upgrade, finance or sell their home are qualified, legitimate business people. Scam artists exist in every industry and often call themselves contractors, property inspectors, mortgage brokers, financial advisors, insurers and real estate agents, in order to steal people's money.
Protecting your real estate investment requires a little time and a little common sense:
1) Protect your identity: Keep your personal and banking information confidential. Don't give out information about yourself, your financial institutions or your home to strangers. Keep all confidential information stored in a safe, secure place like a locked filing cabinet. Shred all documents before you throw them out.
2) Know whom you are dealing with: Do your research before hiring anyone or giving out your personal information. Check the BBB's online database (bbbvi.ca) for company Reliability Reports. Comparison shop, ask for credentials, ask for estimates and ask for references.
3) Stay on top of it: Check your credit report regularly to ensure unauthorized accounts haven't been opened in your name. Conduct a property search at the land registry office to ensure the title to your home is in your name. Always read the fine print before signing ANY documents related to your home.
Remember, your home is a financial investment worth protecting.