Locked and Loaded: You A.K.A Real Estate Fraud Buster

Here at Teranet, we are constantly blogging about real estate and mortgage fraud because it is the biggest plague that exists in the real estate industry today. Fraud really does cost us all with more regulation, the burden to do more due diligence, and mortgage lenders being more stringent both when approving and funding mortgages for financing.

Mortgage fraud impacts every professional across the mortgage industry from real estate sales professionals, to mortgage professionals, to lenders, insurers and more. As an industry, we must collectively work together to combat real estate fraud.

You, the real estate sales professional, are the first line of defence against mortgage fraud! Often you are the deal originator because the entire sequence of transactions follows you engaging a client to buy or sell real estate.

Along the way, you’ve probably encountered real estate fraud either where you stopped it or suspected it but were not certain enough to take action.

Being a real estate fraud buster is easy and comes down to collecting and independently verifying some of your client’s information to ensure that there is nothing amiss.

After completing a preliminary interview with your client and gathering their basic information – there are 3 main things you will want to do to flag potential fraud:

·         What are the parties to the transaction and what is their relationship to one another?

·         Who is the legal homeowner of the property?

·         How is the client financing their purchase? Where is the money coming from?

·         What is the sales history of the property – previous owners and timing of transactions?

This is as simple as performing a property search using a tool that can validate all of the above in a single instance.

If something fishy comes up – it doesn’t necessarily mean your deal is dead in its tracks. It may just mean you need to ask more questions to either determine that a serious problem exists or that there is an innocent explanation for something that appears offside at an initial glance. For example – a property may have passed hands through related parties a couple of times in a short period of time, but upon further investigation the original owner was a grandparent so the property passed to an aunt and then the grandchild. On the other hand, a property changing hands a number of times in a short period of time between related parties, especially a lawyer, could signify a fraud scheme.

Your client will appreciate you for it because digging deeper shows them that you are a real estate sales professional who follows a high code of ethics and professional standards which is a big plus!

Use GeoWarehouse to conduct this due diligence and stop real estate fraud and all the resulting consequences. Visit www.geowarehouse.ca today.

A Divorcing Client May Require More Due Diligence

A divorce can send folks scrambling. In a perfect world, when people split they would be able to talk through what to do with their assets, but in a nasty divorce especially, where emotions are high and everyone is trying to come out a winner, this is not always possible.

Through marriage, people work together, sometimes over their entire lives, to accumulate assets which include real estate. This is why it is not uncommon that some may do whatever it takes to try to get what is theirs out of the divorce.

A very common occurrence with divorcing spouses is that one may want to sell a property that has the other spouse’s name on it with the hope that if an offer comes in they will be able to convince the ex-spouse to sell – some may even deploy other tactics to provide you with a signed offer.

Avoiding this is simple.

• When you are considering taking on a new listing, prior to visiting the property, perform a search to confirm who the legal homeowners are.
• At this point you can contact your client to confirm that all legal homeowners will be at the engagement meeting with identification.

This is the only real way to verify that you are dealing with all legal homeowners – meet them, see them, see their ID. It is a red flag if you uncover that there is another person on title and your client says that they won’t be available to meet in person, but that they can send a copy of their ID and any documents can be faxed to them to sign. As a rule of thumb, if you can’t meet and see ID for all legal homeowners, you may want to pass on the listing.

From time-to-time you may encounter someone that says that their spouse lives out of province or country – in this instance another option is to send the other party to a lawyer in their country to certify their identification and identity.

In the most innocent scenario, taking the extra step to verify who owns a property will mean that you can flag an issue and work through it, or, in the ugliest scenario, prevent blatant mortgage fraud.

Protect yourself and your clients. Use GeoWarehouse to easily find out who is on title. Contact us today at 1-866-237-5937.