If this article doesn’t convince you that fraud insurance is a good idea, I don’t konw what will. If insurance isn’t what you want, you should find a way to protect yourself from mortgage fraud, specially since the Edmonton police are practically advertising in this article that they aren’t going to bother investigating mortgage fraud for the next 5 years or so because it’s too difficult. The following is an exerpt form an article in the Business Edge – I’ve just kept the section about Edmonton in specific. You can see the whole article here: http://www.businessedge.ca/article.cfm/newsID/13880.cfm
Mortgage fraud battle grows as values rise
By Monte Stewart – Business Edge
Published: 10/27/2006 – Vol. 6, No. 22
…Later this month, a case against six men will go to court in Edmonton on what is believed to be the largest mortgage-fraud case in Alberta history, which includes 142 charges involving 118 properties and involves just under $30 million. But Gohar Pervez, the group’s alleged leader, has claimed the accused – who include Edmonton defence attorney Scott Park – weren’t doing anything illegal as they flipped properties.
In another Alberta case, an 85-year-old couple who had enjoyed clear title on their property for 25 years faced the loss of their home, says Edmonton police Det. Mike Shorter, who investigates mortgage fraud full-time.
These are just a few of the cases now going before the courts or being investigated. First Canadian Title, a Toronto-based property title insurance company, estimates the average mortgage fraud to be $300,000. In 2005, mortgage-fraud claims accounted for 33 per cent of First Canadian’s total dollars paid, compared to only six per cent in 2000.
"The lenders are basically falling over themselves to finance these things, and I think there’s been a lack of due diligence on all avenues of it," says Shorter.
In the Pervez case, which Shorter has been investigating for three years, somebody always thought someone else – be it the bank or mortgage broker – was doing the background checks.
"When you look at these red flags jumping up, it’s just someone passing the buck," says Shorter. "The economy is over-heated and people are just doing everything to finance these things – and they’re just taking advantage of it."
Although it’s difficult to get an accurate read on the extent of mortgage fraud, various reports suggest Alberta has the most cases because of its booming economy and strong real estate market.
Last year, the Real Estate Council of Alberta estimated the value of mortgage fraud at approximately $275 million a year.
On mortgage assumptions, says Shorter, there is no legal requirement to get the consent of the lender. A fraudster can get a "straw buyer" to assume a mortgage, collect the cash from the bank and then get off the hook.
"It’s hard to tell which values are good and which aren’t, because what people are paying for houses now is nuts compared to what they were paying 10-15 years ago," says Shorter.
Part of the problem, he contends, is the province’s land titles system and private registry setup.
"I’ve had (two) cases where someone has gone into land titles with forged documents and pushed them through to change title," says Shorter.
After obtaining the title fraudulently through forged signatures, the fraudster took the title document to a lender to obtain mortgages. The victim wouldn’t know of the ownership switch unless he happened to check the title.
"The problem here is, with the system they have in place, you pay a fee for them to process it," says Shorter. "If you find out after the fact that someone’s fraudulently taken the title out of your name, you have to go to court. You have to initiate civil action to reverse it. You have to incur the court costs and you have to get a civil restraining order or place your own caveat onto title to try and tie it up. The system is almost geared to being customer-driven. There are no checks and balances."
Shorter says police, who face long investigations because of the many different parties they have to interview, are limited by a lack of resources and lenient fraud laws. As a result, Edmonton police made "a management decision" not to investigate mortgage fraud for about five years.
But given the sheer size of some of the frauds – and large volumes of money involved – investigators realized mortgage fraud could no longer be ignored. Now, says Shorter "something’s got to be done" to deter mortgage fraudsters.
