How Organized Crime Mortgaged Or Sold At Least 30 GTA Homes Without The Owners’ Knowledge
A year ago, Melissa Walsh said police assured her family it only happened to them. Fraudsters nearly sold her great-uncle’s home in Toronto on the east side without the family’s knowledge.
“We were told to move on, to get over it,” she said.
But earlier this month, a Toronto police press release revealed another case where scammers successfully sold a house before the real homeowners found out what happened.
And now it turns out those two cases are probably just the tip of the iceberg.
CBC Toronto has learned that a handful of organized crime groups are behind this real estate fraud – in which at least 30 homes in the Greater Toronto Area (GTA) have been sold or mortgaged without the knowledge of the real owners. Those revelations come from a private research firm working for a title insurance company to get to the bottom of the scams that cost insurers millions in claims.
“It’s a very painstaking process trying to understand who’s behind it,” said Brian King, president and CEO of King International Advisory Group.
“We’re more or less aware of four or five loosely organized groups working in the GTA.”
The company is currently investigating four property transfer frauds in the GTA, where ownership of a home was stolen using identity theft to cash in on the sale of the property. And at least another 26 mortgage fraud cases where mortgages were registered on a home without owner consent to obtain the cash value of the mortgage.
“It’s hard to hear that this happened to possibly more than 30 other families,” Walsh said. “I don’t understand why this hasn’t been discussed before.”
In addition to the four claims King is investigating, the three other title insurers that provide coverage in Canada told CBC Toronto that they also all received fraud claims where a homeowner’s property was sold without their knowledge. However, they were unable to provide specific figures prior to publication.
Karen Decker, senior vice president of Stewart Title, said the company has had “a lot more than one” case of a home selling out among the real homeowner in the Toronto area.
How the schedule usually works
So how does this actually happen? King says an organized crime group is starting to scour publicly available property records for an unmortgaged home — or a small home with a lot of equity left on the property — as a target.
From there, the groups that end up receiving the fraudulent funds use stolen IDs and hire “stand-ins” to pose as renters to gain access to the home, and other “stand-ins” pose as homeowners to mortgage or sell it.
“Often they are petty criminals who are paid anywhere from $5,000 to $10,000 to break in and impersonate the homeowners,” said King. “The people behind the fraudsters don’t want to be frontal.”
The stand-ins, such as the pair Toronto police attempted to identify via a press release earlier this month, are also shared among crime groups, according to King, depending on the ethnicity of the person required to impersonate the homeowner.
After that, the mortgage or sale is quickly arranged. Before selling, the fake homeowners often accept the first reasonable offer they get.
“In most cases, [they’re] very sophisticated people, the money is usually taken from the fraudulent bank accounts within seven days,” said King.
“It will be turned into crypto currency quite quickly and moved, or into gold bars, and very often it will be immediately shipped abroad, beyond the reach of the authorities here.”
CBC Toronto reached out to Toronto Police for comment several times, but no one was available to speak about the title fraud cases.
King says these cases pose a challenge to law enforcement because organized crime groups can own multiple properties at once in multiple jurisdictions.
“In an ideal world, we could coordinate these efforts in some way between the different regional and municipal police departments so that they gain visibility and connections can be made,” he said.
King’s firm is trying to find out where the fraudulent customer mortgage or home sales funds go, saying they have been successful in recovering money in some cases. But often insurance companies only find out about the fraud when it is too late.
The future of property insurance may be in jeopardy
In most of these cases, the true owner and buyer are protected from most of the losses incurred by the fraud by purchasing property insurance.
The insurance protects homeowners from fraudulent claims on their property and pays legal fees to restore the homeowner’s property rights. If a buyer unknowingly purchases a home that has been fraudulently listed, insurance should protect them as well. In such cases, the real owner is likely to get his house back and the unwitting buyer to get his money back.
But with title transfer claims and mortgage fraud skyrocketing, title insurer John Rider is concerned about the long-term sustainability of providing this coverage.
“We went from zero of those claims to now many dozens,” said Rider, senior vice president of Chicago Title Insurance Company in Canada.
“There are four title companies in the business in Canada and we estimate that industry-wide it’s easily $200 million, probably more, in fraud claims over the last two and a half years.”
Chicago Title Insurance Company has received more than 80 mortgage fraud claims since the end of 2019, largely from the GTA and Greater Vancouver Area. The other three title underwriters shared similar concerns with CBC Toronto – about a growing number of mortgage and property transfer frauds in recent years.
“We’re seeing a level of sophistication in that area that we’ve never seen before,” said Daniela DeTommaso, president of title insurance company FCT. “It’s very organized.”
Rider wants the government to go a step further and lead the way in strengthening ID verification standards for professionals – so they don’t rely solely on IDs – in these types of transactions.
“Otherwise [the government]will find that they will have many consumers at their doorstep begging for help because they have lost title to their home,” he said.
CBC Toronto’s investigation into title fraud is ongoing. If you have information about this story or would like to share information about another fraud, please email [email protected]