At least 30 homes in the Greater Toronto Area have been fraudulently sold or mortgaged by organized crime groups without the knowledge of the real owners, a private investigation firm has found.
The firm, which has been contracted by a title insurance company, is investigating four cases of title transfer fraud where the homeownership was stolen through identity theft, and then sold.
“It’s a very painstaking process to try and understand who’s behind it,” said Brian King, CEO of King International Advisory Group, adding that they are aware of at least 26 cases where mortgages were registered on a home and cashed in without the consent of the owners.
Earlier in January, a couple who was out of town for a business trip discovered that their home had been sold by someone who had impersonated them. The fraudster hired a real estate agent and the new owners had already taken possession of the home by the time the original owners found out.
According to King, this is how the groups operate. They hire people to impersonate the homeowners and use stolen IDs to mortgage or sell the property. They typically begin by scoping targets on public listings, they look for houses with no mortgage, or “a small one where there’s still a lot of equity left in the property.”
The impersonators or “stand-ins,” like the two below from the home that was stolen and sold earlier in the month, are often “petty criminals that are paid anywhere from $5,000 to $10,00,” he revealed.
The mortgage or sale then happens quickly after. The impersonators won’t really stick around for the best offer and would take the first decent one they get. King then says that the money paid is usually moved out of the bank accounts within seven days.
With title insurance, or in most cases at least, the homeowner and the buyer are protected from most of the losses. The homeowner is typically able to re-establish ownership of the property, with the expenses covered by the insurance, while the buyer gets their money back.
The burden is mostly on the title insurers who have to cover the losses. With the number of cases up from “zero…to many dozens,” insurers like Chicago Title Insurance Company are worried they won’t be able to sustain this long term.
“There’s four title companies in the business in Canada and we estimate that industry-wide,” John Rider of Chicago Title Insurance Company told CBC News. “It’s easily $200 million, probably more, in fraud claims in the last two-and-a-half years.”
The January case is still an active investigation and the police have provided very little information on the status of that one publicized case, much less the others, which could mean that there are more cases like this out there.
Insurers like Rider are seeking to get the government to tighten its ID verification standards for selling and taking out a mortgage for a home, so it wouldn’t be so easy for organized crime groups to steal home ownership from unknowing owners and sell them to unwitting buyers.
Information for this story was found via CBC News, Global News, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.