Blog Post

Can Someone Actually Steal Your House?

Katherine Martin • May 19, 2016

It might sound unbelievable, but it’s absolutely possible for someone to steal your house. It’s called title fraud, and it’s a problem that has been around for a while in Canada. And although exposure to title fraud is minimal compared to, say, debit or credit card fraud, the damage to its victims is considerably more severe. Title fraud is potential big money for perpetrators, and their schemes can be complex to say the least. Don’t underestimate the lengths to which they will go to cash in on a big payday.

Let’s break down title fraud, identify who is most at risk, and look at the best ways to protect yourself from having your house stolen out from under you!

Title Fraud

Title fraud almost always starts with identity theft. When someone steals your identity, they actually become you (well not really, but as far as anyone who doesn’t know you is concerned, they are you). So once they become you, they are acting as you, the scope of the fraud starts with what you could carry out as normal business, and then grows from there with increased deception and elaborate plans.

Here are some common scenarios. The perpetrators could do any of the following:

Using your identity, they could discharge your current mortgage and replace it with one at higher value, pocketing the difference in cash, using a bank account they created in your name, only to disappear before the loan/mortgage goes into arrears and a collection agency calls seeking repayment.
Using fake id and forged documents, they could transfer the title of your property out of your name, register a home equity line of credit or mortgage against the title, advance the funds in cash, and disappear, leaving you with a foreclosure notice a few months down the road.
Depending on market conditions, if it’s a real seller’s market, they could even potentially sell your property sight unseen, close the transaction, and skip town before the duped buyers show up at your house in a moving truck, ready to take possession.

The scary thing is, as the victim of identity theft and/or title fraud, there is legal precedence set that as the mortgage was taken out in your name and it was done so as a legal transaction, the onus is on you to prove that you were the victim of fraud. Until you do so, you are responsible for the repayment of the debt or it will damage your credit score.

As in the case of someone fraudulently selling your house out from under you, there is legal precedence set where the new buyers could actually be awarded possession of your house, because you were the victim of identity theft and title fraud, they weren’t. As far as everyone else is concerned, the buyers executed a perfectly legal transaction. It falls on you to prove otherwise!

Who is Most at Risk?

The more equity you have in your property, the more likely you are to be targeted. Let’s say your property is worth $450k, and you owe $150k on your mortgage — there is potential access to $300k of equity. However, as the maximum refinance amount in most cases is 80% of the property’s value, in this case $210k would be accessible. And as most lenders limit the amount of cash you can refinance out of a property to $200k, this is a perfect target.

Properties that are owned clear title (no mortgage or line of credit registered against the home) are considerably more susceptible than properties with a mortgage because there is no mortgage to discharge. Essentially, there is one less hurdle for the fraudster to register a new mortgage or transfer the title.

Unfortunately, if we have to label an age group that is most at risk, it would be the older generation. Seniors are more likely to own their properties clear title and are less savvy about identity theft and may take longer to realize something is going on.

Protect Yourself!

Okay, if your heart is beating a little faster now, don’t worry, it will be okay. Here are some practical steps you can take to protect yourself!

The first line of defence to prevent title fraud is to protect yourself from identity theft. The financial consumer agency of Canada has some good information that outlines the basics. But a lot of it is common sense: keep your ID close, don’t disclose your personal information to strangers on the phone, and if something smells fishy, make sure to investigate before proceeding!

Now, in order to protect yourself from title fraud directly, you can purchase something called title insurance! And if you have recently purchased or refinanced your property, chances are you already have it. With the increasing amount of mortgage fraud, a lot of lenders (most broker channel lenders) make title insurance a mandatory condition of lending you money. This is a really, really good thing.

There are two types of title insurance available from a few different providers, offered directly from your lawyer’s office. The first is title insurance that covers the lender in case of title fraud, and the second covers the lender and you. It’s smart to go with the more comprehensive policy that covers you!

Title insurance is relatively inexpensive and covers you as long as you own the property (even if you discharge your mortgage). It can be purchased at any time, so if you aren’t sure if you have title insurance, might be worth a look through your mortgage documents. And if you can’t make heads or tails of them, take them to your mortgage broker and they will be happy to work through everything with you.

What to Do if You Suspect Fraud?

If you suspect or find out that you are the victim of title fraud, you should do the following:

Contact the Canadian Anti-Fraud Centre , at 1-888-495-8501 or info@antifraudcentre.ca.
Report the situation to the police.
Report the fraud to both credit reporting agencies Equifax and TransUnion.
Contact your provincial land registry and let them know.
Keep all documents and record the exact time you became aware that you were a victim.

This article originally appeared in the DLC Newsletter for April 2016.

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Mail

Katherine Martin

Origin Mortgages

Phone: 1-604-454-0843
Email: kmartin@planmymortgage.ca
Fax: 1-604-454-0842

Porting Your Mortgage

By Katherine Martin • 24 Apr, 2024

Porting your mortgage is when you transfer the remainder of your current mortgage term, outstanding principal balance, and interest rate to a new property if you’re selling your existing home and buying a new one. Now, despite what some big banks would lead you to believe, porting your mortgage is not an easy process. It’s not a magic process that guarantees you will qualify to purchase a new property using the mortgage you had on a previous property. In addition to re-qualifying for the mortgage you already have, the lender will also assess the property you’re looking to purchase. Many moving parts come into play. You’re more likely to have significant setbacks throughout the process than you are to execute a flawless port. Here are some of the reasons: You may not qualify for the mortgage Let’s say you’re moving to a new city to take a new job. If you’re relying on porting your mortgage to buy a new property, you’ll have to substantiate your new income. If you’re on probation or changed professions, there’s a chance the lender will decline your application. Porting a mortgage is a lot like qualifying for a new mortgage, just with more conditions. The property you are buying has to be approved So let’s say that your income isn’t an issue and that you qualify for the mortgage. The subject property you want to purchase has to be approved as well. Just because the lender accepted your last property as collateral for the mortgage doesn’t mean the lender will accept the new property. The lender will require an appraisal and scrutinize the condition of the property you’re looking to buy. Property values are rarely the same Chances are, if you’re selling a property and buying a new one, there’ll be some price difference. When looking to port a mortgage, if the new property’s value is higher than your previous property, requiring a higher mortgage amount, you’ll most likely have to take a blended rate on the new money, which could increase your payment. If the property value is considerably less, you might incur a penalty to reduce the total mortgage amount. You still need a downpayment Porting a mortgage isn’t just a simple case of swapping one property for another while keeping the same mortgage. You’re still required to come up with a downpayment on the new property. You’ll most likely have to pay a penalty Most lenders will charge the total discharge penalty when you sell your property and take it from the sale proceeds. The penalty is then refunded when you execute the port and purchase the new property. So if you are relying on the proceeds of sale to come up with your downpayment, you might have to make other arrangements. Timelines rarely work out When assessing the housing market, It’s usually a buyer’s market or a seller’s market, not both at the same time. So although you may be able to sell your property overnight, you might not be able to find a suitable property to buy. Alternatively, you may be able to find many suitable properties to purchase while your house sits on the market with no showings. And, chances are, when you end up selling your property and find a new property to buy, the closing dates rarely match up perfectly. Different lenders have different port periods Understanding that different lenders have different port periods is where the fine print in the mortgage documents comes into play. Did you know that depending on the lender, the time you have to port your mortgage can range from one day to six months? So if it’s one day, your lawyer will have to close both the sale of your property and the purchase of your new property on the same day, or the port won’t work. Or, with a more extended port period, you run the risk of selling your house with the intention of porting the mortgage, only to not be able to find a suitable property to buy. So while the idea of porting your mortgage can seem like a good idea, and it might even make sense if you have a low rate that you want to carry over to a property of similar value, it’s always a good idea to get professional mortgage advice and look at all your options. While porting your mortgage is a nice feature to have because it provides you with options, please understand that it is not a guarantee that you’ll be able to swap out properties and keep making the same payments. There’s a lot to know. If you’re looking to sell your existing property and buy a new one, please connect anytime. It would be a pleasure to walk you through the process and help you consider all your options, including a port if that makes the most sense!

A First Home Savings Account (FHSA)

By Katherine Martin • 18 Apr, 2024

Dreaming of owning your first home? A First Home Savings Account (FHSA) could be your key to turning that dream into a reality. Let's dive into what an FHSA is, how it works, and why it's a smart investment for first-time homebuyers. What is an FHSA? An FHSA is a registered plan designed to help you save for your first home taxfree. If you're at least 18 years old, have a Social Insurance Number (SIN), and have not owned a home where you lived for the past four calendar years, you may be eligible to open an FHSA. Reasons to Invest in an FHSA: Save up to $40,000 for your first home. Contribute tax-free for up to 15 years. Carry over unused contribution room to the next year, up to a maximum of $8,000. Potentially reduce your tax bill and carry forward undeducted contributions indefinitely. Pay no taxes on investment earnings. Complements the Home Buyers’ Plan (HBP). How Does an FHSA Work? Open Your FHSA: Start investing tax-free by opening your FHSA. Contribute Often: Make tax-deductible contributions of up to $8,000 annually to help your money grow faster. Withdraw for Your Home: Make a tax-free withdrawal at any time to purchase your first home. Benefits of an FHSA: Tax-Deductible Contributions: Contribute up to $8,000 annually, reducing your taxable income. Tax-Free Earnings: Enjoy tax-free growth on your investments within the FHSA. No Taxes on Withdrawals: Pay $0 in taxes on withdrawals used to buy a qualifying home. Numbers to Know: $8,000: Annual tax-deductible FHSA contribution limit. $40,000: Lifetime FHSA contribution limit. $0: Taxes on FHSA earnings when used for a qualifying home purchase. In Conclusion A First Home Savings Account (FHSA) is a powerful tool for first-time homebuyers, offering tax benefits and a structured approach to saving for homeownership. By taking advantage of an FHSA, you can accelerate your journey towards owning your first home and make your dream a reality sooner than you think.