Mortgage fraud—Types and important precautionary tips
Canada, 8th August: Are you worried about the growing menace of mortgage fraud in Canada and want to know how to protect yourself against such frauds? Read this article to know more------
Mortgage frauds are becoming a norm of the day taking different shapes and involving people from various walks of life and this is a cause of serious concern.
If you are asked to give misleading or false details to any mortgage lender, then as per the Criminal Code of Canada, it is regarded a serious offence.
Mortgage frauds can be of two types—one in which a scheme is chalked to get money from the people in a deal involving property exchange between buyers, states Diane Scott, president of Calgary Real Estate Board (CREB(R)).
And if any deal involving property investment seems too good, then it is not true, warns Scott. Some of the quite common real estate frauds include the following---
• Real estate flipping—It happens when property is bought and sold immediately with the sole motive of inflating its value. This is done using false documentation of loans, exaggeration of incomes and untruthful evaluations so as to get loans. A false evaluation of the property is made to inflate the price by the seller and to get a buyer ready for a huge mortgage. As soon as the property is mortgaged, it is sold while giving mortgage to another buyer.
• Straw buyer- Straw buyer is a person who buys a property on behalf of another pretending himself to be legitimate buyer. In some cases, such buyer is given money is lieu of lending his identity while there are many others who are actually unaware of the fact that their identity is being used in a mortgage deal leading to a fraud.
Vital tips to safeguard against mortgage frauds----
• Always use the services of a mortgage broker having a license under the Real Estate Act, Alberta or get in touch with RECA (403.228.2954) to enquire about registration.
• Seek detailed analysis of comparative market prices of the real estate from your REALTOR(R).
• Always get a copy of the title search of the land.
• Ask for an independent representation for the property purchased.
• Ensure that the deposit amount is in a trust account.
With all these points in mind, you can look forward to a safe purchase of real estate.