It has happened again in British Columbia, mortgage fraud. Con artists have sold a home and the owners didn’t even know it was happening. It was in Richmond. The man who owned the house is in his 70s and this crime has ruined his life. But more about that later.

The Thomson Report first reported on mortgage fraud more than three years ago in 2006 in a series of articles that exposed the practice.

The following is copy of my column from September 1, 2006...

I remember last year when I did a story about this next item it was happening in Alberta and Ontario. The police were involved and they caught the culprits. I was asking the question, could this happen here?
Everyone I talked to in the real estate business said no it can’t, we have laws to protect people in the sale of a house. Then a story broke in Vancouver and a trio of crooks was charged in a mortgage fraud scam, netting the group $180,000 said the police.

Meanwhile in Alberta the case was much larger. The Alberta RCMP laid dozens of charges against four men in a $3.9 million mortgage fraud scheme. The police said it was the largest they had ever seen.

Taking a home they didn’t own and creating a new owner without the real owner knowing it was happening and selling the home for a large amount to another of their scam team and then getting a king sized mortgage and abandoning the deal and non-attendance on the mortgage.
This is the new story and it is frightening that something like this could happen. Here is a report from Harold Levy writing in the Toronto Star.

An 89-year-old man had his North York bungalow stolen from him in the rising wave of title fraud.

He purchased the property in 1980 for $67,500 to generate a rental income that would help pay for the education of relatives back in Hungary.

He could not believe his ears on June 26/06 when his neighbour, a real estate agent, told him she had noticed on the computer that he had sold his rental property in May.

Police believe his most recent "tenants" forged his name on a power of attorney that purported to give a grandson named "Aaron Paul Reviczky" authority to sell the home on his behalf.

He doesn’t have a grandson.

On May 15, the property was sold on his behalf for $450,000 to a purchaser who immediately took out a mortgage of $337,500.

He did not get the proceeds.

A lawyer had to break the news that he may lose his house forever — even though he was an innocent victim of fraud — because Ontario law recognizes the transaction as valid where the purchaser is unaware of the scam.

They had to tell him that although he would ultimately receive financial compensation for the loss of his home, this would entail legal fees and an application to Ontario's Land Titles Assurance Fund, which could take several years.

He had put a "for rent" sign on his property on March 1st after the previous tenants, who had lived there for 12 years, had gone back to British Columbia.

Five days later, he agreed to rent the home to a couple. They signed rental papers and handed him $2,500 in $100 bills for the first and last month's rent.

But the house remained empty. In mid-April, he was told by the couple that they had rented the house for someone who was coming from Russia.

The last time he ever saw the renters was when one of them gave him $1,250 in cash and told him the people would arrive "in a short time."

He allegedly sold his house through the power of attorney that had been notarized by a North York lawyer. The victim had never seen the lawyer in his life.

(The lawyer in this case was also charged and disbarred. He had represented these scam artists before.)

An expert on real estate and mortgage fraud, said the case is perplexing because while we can feel sorry for the first owner, we can feel equally sorry for the buyer, who like every other buyer, could never be certain that their vendor is the real owner.

Earlier this summer, several other identity-theft victims in Toronto were also shocked to discover the law didn’t protect them.

(He did get his home back and the courts said the mortgage company should have checked more thoroughly. The bank HSBC was the lender and they argued unsuccessfully that the mortgage was valid and above board. The courts said the bank should have done more due diligence. In the end Mr. Reviczky spent about $30,000 on legal fees himself to get his own home returned.)

Ralph Roberts, a Michigan-based expert on mortgage fraud, says inroads will not be made into burgeoning real property and mortgage fraud until more homeowners and legislators become aware it exists. "There is not enough of a public awareness," he says. "People just keep getting dragged into it one after another.

Mortgage and Title fraud have also taken on a higher profile in Canada recently. Organizations such as the Law Society of Upper Canada have been meeting with their counterparts in the real estate, financial industries, and police authorities to try and solve the problem.

Without due diligence throughout the process, it is easy for fraudsters to pass themselves off and to take advantage of the lack of oversight.

Global TV interviewed Valerie MacLean, B.C. Crime Prevention Association executive director. She said that homeowners should have Title Insurance so the courts know who owns the property. Does that mean everyone should have Title Insurance?

Mortgage and Title Fraud are crimes sweeping the country. I find as I ask questions it is a crime that no one wants to talk about — not the government, not the banks and from what I have read, not even the victims.

The crime goes by the a lot of names which were all used in the Alberta fraud trials. “The Bump” and “The Oklahoma Flip” is what is going on across the country and seems to be proving that it is all to easy to pull off.
Be careful out there.

That was three years ago.

In tomorrow's column I will provide more details on this devastating fraud scheme.