Just as a pediatrician or nurse might be more worried for their kids seeing as they are witness to all the accidents kids are prone to, as mortgage agents, we can only encourage our clients to obtain title insurance, knowing what we do about mortgage and title fraud. While exact statistics are hard to come by when it comes to title fraud, estimates are that $400 Million to $1.5 Billion in damages due to title fraud occur every year in Canada.
Title fraud can occur in one of two ways. Someone can pose as you (through identity theft), register a new mortgage against the property in your name, and make off with the proceeds. Or they can forge your signature to transfer the title, register a mortgage and make off with the proceeds. This can be a big surprise when you go to renew your mortgage and find out you no longer are the owner of the property – your home was literally stolen from you while you lived in it.
In the past, homeowners were responsible for paying any new mortgages registered against the property in the case of fraud. This has changed recently to fall under the responsibility of the lenders who now provide more thorough screening before lending. Either way, title fraud is an incredibly cumbersome and time-consuming process to overcome, and you will more than likely have to pay for legal costs and so on to restore the property title to your name.
Fortunately, title insurance will cover you in the case of title fraud and will do everything necessary, including obtaining legal help, to ensure your title is restored. Title insurance also covers any financial loss and damages related to other title issues, including tax issues on title, public utilities arrears, and encroachment issues.
The common belief is that title insurance only applies to your property as long as you have a mortgage. The truth, however, is that title insurance lasts as long as you own the property. With one-time premiums costing only around $150-$400, title insurance is worthwhile to protect yourself from fraud and any other issues surrounding your title as previously mentioned.
The biggest thing to keep in mind to avoid title fraud is to stay proactive when it comes to avoiding identity theft or when purchasing a home or obtaining a mortgage. Beyond protecting your passwords, IDs, and being careful when posting your information online, make sure you never feel pressured into signing or leaving signature fields blank when purchasing a property or signing for a mortgage. Also to keep in mind is to read your title insurance policy to make sure everything you need covered is in there.
When getting a mortgage, speak to your broker about title insurance to learn more.