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Identity Thieves Steal Homes
Posted by
CowboyNeal
on Sat Sep 02, 2006 10:09 AM
from the better-than-credit dept.
from the better-than-credit dept.
westcoaster004 writes "Identity thieves in Canada have begun targeting the homes of their victims. Recently, several cases of mortgage and title fraud have involved identity theft; several individuals have had their houses sold without their knowledge. Ontario's land-registry system does not currently protect homeowners from such fraud, but instead favors banks, mortgage companies, and purchasers. The provincial government is however working to solve the problem."
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Oh no! (Score:5, Funny)
I think they stole the article, too.
And you wonder... (Score:5, Funny)
And you wonder why we call Canada our 51st state.
Re: (Score:3, Informative)
Re:I thought (Score:5, Funny)
Re:I thought (Score:4, Insightful)
Fight fire with fire (Score:5, Interesting)
Pretty sure you'd find their response to these actions would change rather quickly methinks.
Re:Fight fire with fire (Score:5, Insightful)
Who came up with the idea that they should let someone else sell your home as long as they can successfully trick the buyer?
Whoever it was, they should be shot.
Re:Fight fire with fire (Score:5, Funny)
Shot by someone faking the lawmaker's identity, so that it goes down on record as a suicide.
Poetic or what?
Re:Fight fire with fire (Score:5, Informative)
Ah, but you forget that there are two victims here - the seller and the purchaser. Let's say you buy a house for $400,000, and you take out a mortgage for $300,000. You also plow $50,000 worth of renovations into it. The paperwork checks out, everything is fine and your family settles in.
You've been living there for two years, and then one day someone claiming to be the real owner shows up and tells you to get the hell out of his house. Turns out he's right - this is/was his rental property. His long-gone tenants forged documents and sold the house, pocketing the $400,000 and running away. What happens to you? Your mortgage was legal, so if you get kicked out you're still on the hook for $300,000, not to mention the $100,000 of your own money that you essentially gave away. What if the owner refuses to cover the $50,000 in upgrades? Now you're out $450,000 and you're living out of your car. Not to mention legal fees, delays etc...
Title insurance may ease the financial pain, but it still remains that two people have a claim to own the house, and one of them has to lose. That's why it sucks.
On another note, Canadian law outside of Quebec is based on English common law.
Re:Fight fire with fire (Score:5, Insightful)
No I've not. First of all, the seller is not a victim at all. He's a crook.
As for the purchaser, it is up to him to do his due diligence by investigating the chain of title and the identity of the seller. Beyond that, buyer's title insurance is available, and EVERYONE should ALWAYS buy a buyer's title insurance policy whenever they purchase real estate (do not confuse this with the lender's policy which you will also pay for at closing).
The owner will usually have no opportunity to prevent this type of fraud. The buyer always will.
On another note, Canadian law outside of Quebec is based on English common law.
Yes, but this is one area where they have deviated from the common law in a very stupid way. The common law rule is that you do not have the power to sell something that you do not own. The only way to "steal" real estate should be through adverse possession. But that requires that someone occupy (possess) the property adversely, exclusively and openly for several years without any action taken by the rightful owner.
Re:Fight fire with fire (Score:4, Informative)
I can only think that the OP meant the (rightful) owner - clearly the seller is a crook, but he's right, there are definitely two victims in this. More, if the purchaser has a family.
But that requires that someone occupy (possess) the property adversely, exclusively and openly for several years without any action taken by the rightful owner.
I believe that here in the UK (at least), the colloquial name for that Squatter's Rights. A quick google suggests that the required period is around 12 years.
Re: (Score:3, Insightful)
Unless this was all done with cash then it is the buyers bank who "owns" the house and the sellers bank who "owned" it bef
Re:Fight fire with fire (Score:4, Informative)
Except for habeas corpus. And there is that eminent domain thingy, too...
Who came up with the idea that they should let someone else sell your home as long as they can successfully trick the buyer?
In a free market, like we have in Canada, no one needs permission from anyone to sell something that is legally theirs. So "they" don't "let" anyone sell anything. We have a legal right to sell what is ours. The whole purpose of this fraud is to create the appearance that the property legally belongs to someone who does not in fact own it.
Whoever it was, they should be shot.
God bless America.
Now you have the U.S. system wrong (Score:3, Interesting)
While many banks are regulated through the Dept. of the Treasury, they do not borrow money from it. Instead,
Reminds me of Carmen Sandiego (Score:5, Insightful)
Legal Penalties Too Low (Score:5, Interesting)
I'd go for drawing and quartering someone who did this.
Fireants (Score:4, Funny)
Re: (Score:3, Insightful)
The other shoe hasn't dropped yet (Score:5, Interesting)
If someone registers a mortgage against your property it is because the bank thinks they are you. That means the bank is responsible for correctly identifying the owner of the house. If they are not sufficiently careful to correctly identify the real owner of the property, they are negligent. They can be sued for negligence. That can get a jury involved. There's no jury in Canada that will believe that a bank, who participates in the theft of your house, wasn't negligent. My wag is that we won't have many more cases of house theft because the banks will see the writing on the wall and change their procedures.
Re:The other shoe hasn't dropped yet (Score:5, Informative)
I know because I was reading up on it when I bought my house 3 years ago.
Government complicit in the crime (Score:5, Insightful)
Re:Government complicit in the crime (Score:4, Insightful)
Even the smallest mortgage bank is far wealthier than the usual homeowners involved. Plus, they may have insurance for their investments (don't know for sure whether such insurance exists, but it seems likely) and can certainly be compensated through writing off loss through fraud.
They are also in the best position to help ensure that everyone does their due diligence to prevent such fraud from occurring. If it costs the bank when they screw up, they'll take that a lot more seriously.
Clearly the fairest way to resolve the situation is to refund the buyer's purchase price and return the property to its original owner. Everyone still has injuries (except the asshat fraudster), but no one is out a life's savings.
Re:Government complicit in the crime (Score:4, Informative)
Amazing how much more careful an instutition is when they are on the hook rather than being able to say "oops, we didn't notice that nobody involved actually owned this: now give us our money anyway".
Fraud (Score:5, Interesting)
Fraudulently transfer ownership to the criminal.
Sell the property to a third party, take the money and run.
The thing I don't understand is how the owner loses it. If someone steals your car and you can prove you're the origional owner you get it back. With a house it's quite simple to prove you're the owner.
It must be an interesting loophole to avoid this. Otherwise people wouldn't care. If someone comes to my door claiming they own my house I should tell them to screw off. If I purchase a house in one of these scams, it's why I have title insurance.
I also don't understand how they can't track the hundreds of thousands of dollars back to the fraudsters? If they can't track this money, why do they require reporting of all transactions over $10k? It obviously doesn't work.
Re: (Score:3, Interesting)
Not the title insurer's fault (Score:4, Interesting)
So - yes, they make sure the owner owns it, not "is this the owner"...
Re:Fraud (Score:5, Interesting)
In N.Y., at least, you should remember to buy a policy for yourself, too. If you just buy the insurance for the bank, and there's a problem that invalidates the title, the insurance company will pay off your loan to the bank -- and then come after you for the cash.
Because Canada legalized theft long ago (Score:5, Informative)
In Canada, they changed something in the Laws during the early 1990's that basically legalized the purchase of stolen property, if the property is purchased thru a legit registered business.
The typical case would be a victim of robbery that kept all receipts in a safe at the bank, then noticed some of their stolen goods lying in a pawn shop shelf. They would then notify the the police, receipts and other proofs in hand, but would meet resistance from the pawn shop owners. Anyhow, in most cases, the most valuable merchandise was already gone and could not be traced. As I recall, pawn shop owners felt that the Law shafted them by forcing them to return stolen goods to their rightful owner, after already handing money in exchange. What did Canada do? They changed the Law. Once a pawn shop has paid money in exchange for some valuables, they legally own them, even if you can prove that they stolen goods that belong to you.
A friend in Montreal lost a whole recording studio worth of equipment that way, right after the law was changed. Showed up in various pawn shops, noticed that the serial number of serveral items there matched those of material declared as stolen to the police a week before... only to hear the police say that he could not recover them, because the Law protects pawn shop owners and tramples the rights of stolen property's rightful owners. his story made the evening news in Montreal, back then.
So, however grossly unfair as this story about stolen houses might be, it remains consistent with Canada's position of protecting the buyer, in total contempt of victims of criminal acts such as property title theft or robbery.
For what it's worth, I think that proper remedy would be to:
Re: (Score:3, Interesting)
The other answer involves high explosives but I believe we needn't go that far.
strip the attorney that validated the
Re:Fraud (Score:5, Insightful)
The Notary Public should get nailed... (Score:5, Interesting)
Say NO to malpractice insurance (Score:2)
I think the mere existence of malpractice insurance causes a lot of negligence. If the notary is the one who screwed up, then he/she alone should pay for it. Take away
Re:Say NO to malpractice insurance (Score:5, Insightful)
Next, we should make people pay back the auto insurance companies when the get in an accident and total their cars! Serves them right for making a mistake!
Then all those people in New Orleans? Screw em! They should have to pay the banks back TRIPLE instead of filing homeowners claims! After all, they insisted on buying homes there, right?
In case you haven't taken my point, you've missed the entire concept of what insurance is for. People make mistakes. It happens. Even the best surgeon or lawyer can make an error that injures their patient/client/customer/whatever.
Yes, this notary was negligent. That's why he/she carries malpractice insurance: so a mistake won't make their families homeless.
Tell me, would YOU want to have a job where a mistake could cost you everything you own and 90% of what you earn for the next 20 years? We're not talking about high stakes gambling or high-risk investment here; we're talking about being a NOTARY.
Maybe when you climb down from your high horse you can tell the rest of us what it's like to be perfect. Maybe you can also tell us about how the notary making a mistake makes them more responsible than the perpetrators of the identity theft.
Re:Say NO to malpractice insurance (Score:4, Interesting)
I have professional liability insurance as an engineer. I pay about 8% of my gross income for the insurance, and yes, it covers errors and omissions up to what I would make over the next 30 years. If I ever make a mistake that endangers public safety, I would likely lose my engineering license.
Unfortunately, Notaries are a weak link in the system. They really don't have enough information to do their job, the cost for notarizing a document is not commensurate with the risks they could incur, and people aren't really willing to pay more for a formality that generally has little value. Either they need additional insurance, or identity verification needs to happen at multiple levels.
In this specific case, I don't know how you would avoid having multiple tiered documents that would make it impossible to prevent this type of fraud. It becomes a shell game quickly.
for doctors at least, it is very bad (Score:3, Interesting)
Current money flow: patient to doctor to insurance to lawyer+patient
Proper money flow: patient to insurance to patient
That is, the patient should be buying insurance to cover any errors made by the doctor. Doct
Maybe the title insurer should pay, (Score:3, Informative)
Not new... (Score:4, Interesting)
It isn't new, it's been going on for years. It's just starting to hit the media. It made the news recently in Ontario because identity thieves falsely sold a house out from under the real owner. A bank issued a mortage against the house, and when no one made payments, tried to reposses the house. The appeal courts ruled in favour of the bank, saying that even though the house sale was fraudulent, the real owner is still responsible for the payments. The Ontario government is working to change the law.
Another common fraud is to buy a run-down house for 75k. Get some building permits, then sell it to someone else for 100k. Get some building permits, then sell it to someone else for 150k. Get some building permits, then sell it to someone else for 200k.
Then, get a mortgage on the property for 175k. The bank/mortgage lender sees all these transactions documenting the increase in the value of the house, and in the overheated housing market, doesn't want to lose the business. Lots of people do this legitimately - buy a run-down house, fix it up, and sell.
Of course, none of the transactions were real, the house was being bought & sold between the same group of people, and it is still the same run-down house worth 75k. People tend to have less sympathy for the bank, they usually say the bank should have sent a home inspector to examine the property.
Odd (Score:4, Insightful)
Odd. If it's not yours, you can't sell it. At least, that's usually the rule.
Don't Oversimplify (Score:5, Informative)
It doesn't help anyone if we throw around terms like "mine" and "yours" when dealing with real estate. I only know basic US real esate law. The idea of "it's my house" is intuitive. It is also false. (here)
Land is scarce, especially land in proximity to other desirable land. When you "have title," I emphasize, "have title" to land, you have certain rights over that land, possession, enjoyment (use in any legal manner), control, exclusion (keep others from entering), and disposition (transfer interest). You also have rights to the air above, ground beneath, and rights to use adjacent bodies of water.
Because land is so scarce, it is valuable, and these rights are partitioned in all kinds of ways. The rights are not only sold piecemeal, groups of the rights can be divided piecemeal between multiple people with different kinds of transfer abilities.
And have I mentioned various kinds of leases and wills?
One of the functions of local government is to maintain a database of who has title to what land in a given area. But these rights can be partitioned with such complexity that it is a serious undertaking to answer the question of exactly who has which land interests on a given parcel, which may itself have been divided!
So what is the local government to do? They maintain a database of "deeds". Deeds are contracts which transfer rights from one party to another, or correct errors (spelling anyone?) in previous deeds.
In other words, title is determined by examining a natural language log structure filesystem. Futhermore, the records in these databases only go back, what, 60 - 100 years? You think you own your home, but there may be a valid legal interest infringing yours.
Do you see why you need title insurance?
My intution is that they tried to simplify things in Canada. The simplification was probably to "clarify" ownerships by giving the government more authority to assert exactly who has title. This "favors" the mortagage company in these exploited cases. I think the intention was to reduce risk for everyone involved. Inadvertently they have introduced a legal vulnerability.
And you thought your OS vendor was a little slow to respond.
i know what we should call these people... (Score:3, Funny)
No Walkthough? (Score:3, Insightful)
Re:No Walkthough? (Score:4, Informative)
Re:No Walkthough? (Score:4, Informative)
The guy that was living there is the person suspected of fraud. You'd know that if you had read the very short article.
who got scammed? (Score:3, Insightful)
It was not the homeowner who got scammed, the homeowner (and the buyer) are victims, but it is the lawyers and the lenders that got scammed. And since it is their job not to get scammed, they should be made responsible.
Of-course if the system is so insecure that it is easy for the lawyers and the lenders to get scammed, then it is the government's job to fix the current problem with the victims and to secure the system.
In these cases the identity of the homeowners were stolen (there is more than one case.) Their signatures were forged, fake power of attorney were created. There should be an investigation firuging out exactly what happened, step by step and identifying the steps that made it possible for identity to be stolen. Then something should be done to fix those steps in the home buying process.
In this case I hope the Ontario government actually steps in and helps the homeowners to get their homes back, the buyers should get their downpayments back and the lenders probably will collect insurance.
This type of fraud is one of the classics (Score:5, Informative)
A choice quote from that British case: "It may seem remarkable that the law governing the consequences of a fraud as common as this is still in doubt, but it is." This would apply to all of the jurisdictions deriving their law from British common law, including Australia, Canada and the U.S.
Here is an American viewpoint (the Law Site on MSN) on the issue of Mistake [msn.com]
I am not a lawyer... (Score:5, Interesting)
Furthermore lien theory states make it difficult to commit title fraud because for a title transfer to occur everyone who may have a lien on a particular propery (govt, bank, plumber etc...) has to have their lien satisfied. I'd love to see someone commiting fraud convince a bank that they should relinquish their 250K+ lien on a property they stand to make big $$ on by either collecting the interest of selling on the secondary mortgage market (fat chance).
As far as title/mortgage fraud goes I really wonder what kind of screwed up system Canada has. A quick search [google.com] for "real estate" "title fraud" is completely filled with links about canadian real estate and almost no other country. Not that I have anything in particular against Canada, half my family lives there, but that is very telling.
Re:I am not a lawyer... (Score:5, Informative)
Furthermore you would have to find someone with hundreds of thousands in cash who is gullible enough to by a home without running a title search elderly folks are a possibility but in my experience when it comes to real estate purchases/sales most elderly people lawyer up very quickly for even the smallest transaction so you'd have a hard time pulling that off as well.
Where's Dudley Do-Right When you need him? (Score:4, Funny)
After all, isn't Canada the last known whereabouts of famous foreclosure mortgage robber baron Snidely Whiplash?
I thought the mountie always got his man...
Is this landlord favoring policy possibly a British legacy?
Re:It is time something is done about this! (Score:4, Informative)
Heh, but he didn't realise that Slashdot adds a rel="nofollow" attribute to the link...
Re:This is very dangerous... (Score:5, Insightful)