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Feb 10

What to Do If You Suspect Mortgage or Title Fraud in Canada (And How to Protect Yourself)

Author: Chris Allard

Category: Helpful Tips

Real estate fraud is a growing concern across Canada, with one CBC report highlighting how fraudsters can exploit gaps in the system. The startling reality is that the most common victims are long-time homeowners.

That’s why it’s so important to know how to protect yourself from mortgage or title fraud. And, when you can’t stop it from happening, what to do if you suspect it is happening. Staying proactive, informed, and properly set up can significantly reduce your risk. Here, we’ll explore how to protect the equity you’ve worked hard to build.

Understanding the Risks of Mortgage Fraud to Canadian Homeowners

Mortgage fraud refers to any deliberate deception or misuse of information in a mortgage or property financing. This scam means homeowners are often targeted without their knowledge, through identity theft or forged documentation.

Mortgage fraud generally falls into two categories:

Fraud Committed By Borrowers

  • Providing false income or employment information.
  • Misrepresenting how a property will be used.
  • Participating in straw buyer arrangements.

Fraud Committed Against Homeowners

  • Identity theft when applying for a mortgage or refinancing.
  • Fraudulent refinances on properties with significant equity.
  • Fake mortgage discharges or loan payouts to manipulate title records.

What is the Penalty for Mortgage Fraud in Canada?

Mortgage fraud is a criminal offence in Canada and may result in charges, fines, or imprisonment, depending on the severity of the offence. For many homeowners, the concern is less about penalties and more about the financial and legal stress that can follow when this type of fraud occurs.

Why Fully Paid-off Homes are at Higher Risk of Title Fraud

Title fraud is when someone steals your identity and uses forged documents to change the legal ownership of your home. It’s particularly dangerous because it often occurs without the homeowner’s knowledge and is not discovered until long after the crime is committed.

Is Title Fraud a Problem in Canada?

Yes. Title fraud is a growing issue in Canada; fraudsters can register loans or transfer ownership using stolen identities by targeting:

  • Seniors, who are more likely to own their homes 
  • Long-time homeowners with substantial equity in their properties
  • Paid-off properties, where there’s no lender monitoring the title

The underlying issue is that there are fewer built-in safeguards when no mortgage or line of credit is registered on the home.

Can Someone Steal Your Home Title If You Have a Mortgage?

Title fraud is much harder, but not impossible, to commit when there is a mortgage or line of credit on the property, as it becomes subject to lender oversight.

As a result, lenders are notified when:

  • A mortgage is paid out
  • A new loan is registered on the title

Because of this added layer of oversight, fraud attempts are more likely to be flagged or delayed. Fraudsters typically look for properties where they can move quickly and quietly, which is far easier when no lender is involved.

Why a Mortgage or HELOC Helps Protect You From Title Fraud

When homeowners plan to pay off their mortgage, we often recommend establishing a Home Equity Line of Credit (HELOC) as a protective measure.

This recommendation enables continuous oversight and visibility into your property’s title.

How Registered Liens Act as a “Blocking Mechanism”

A registered lien doesn’t prevent fraud outright, but it does make it significantly more difficult because:

  • Lenders must be notified of changes to the title
  • Payouts and new registrations trigger review processes
  • Additional verification is required before funds are advanced

A lien introduces friction, oversight, and delays, often enough to stop or expose fraudulent activity.

Why Paying Off Your Mortgage Can Increase Fraud Risk

Paying off your mortgage is a major milestone, but it can unintentionally increase your exposure to title fraud.

  • No lender is monitoring the title
  • No automatic alerts tied to financing changes

The property has an unencumbered title, reducing the risk of title fraud.

Why We Often Recommend a HELOC After Mortgage Payoff

For many homeowners, a HELOC provides protection simply by existing:

  • Maintains monitoring and oversight
  • Keeps a lien registered on the title

A HELOC does not need to be used to be effective; it simply needs to be in place as an additional layer of protection.

What to Do If You Suspect Mortgage or Title Fraud

If you suspect mortgage or title fraud, acting quickly can limit financial losses and make resolution easier.

Early Red Flags to Watch For

  • Unexpected mail from lenders or law firms
  • Credit inquiries or accounts you didn’t authorize
  • Legal notices related to your property that don’t make sense
  • Changes to property tax bills or land registry information
  • Mortgage payout or discharge notices you didn’t request

What Evidence Is Needed to Report Fraud?

  • Recent credit reports
  • Land registry records
  • Government-issued ID
  • Correspondence from lenders or lawyers
  • Property tax or utility statements showing discrepancies

Who to Contact Immediately

  • Your mortgage broker
  • Your lender (if a mortgage or HELOC exists)
  • A real estate lawyer
  • Credit bureaus to place alerts
  • Police if identity theft or forgery is confirmed

Identity Theft & Old Documents: How Fraud Usually Starts

Most mortgage and title fraud cases begin with identity theft. Common entry points include:

  • Old mortgage paperwork, discharge statements, or refinance documents
  • Property tax bills or utility statements that reveal ownership details
  • Mail theft, including intercepted bank or government correspondence
  • Data breaches involving financial, legal, or real estate records
  • Public records, combined with stolen personal identification

Homeowners can be at risk for years after purchasing their property. Monitoring credit activity and keeping personal records secure matters long after closing.

Title Insurance: Your Last Line of Defence

Title insurance plays an important role in cases of fraud, but it’s best understood as a backup, rather than a complete preventive measure.

What Title Insurance Covers

  • Forged documents
  • Fraudulent title transfers
  • Unauthorized mortgages or liens
  • Legal costs required to restore ownership or clear title

Why Title Insurance Alone Isn’t Enough

Title insurance only triggers after fraud has occurred. It works best when combined with:

  • Credit monitoring
  • Maintaining a registered lien
  • Regular review of financial and legal correspondence

Using multiple layers of protection significantly reduces the likelihood of long-term damage.

Is It Better to Go Through a Bank or a Mortgage Broker?

Both banks and brokers can help arrange financing, but experienced mortgage brokers often add an extra layer of oversight.

Mortgage brokers can:

  • Compare multiple lenders and policies
  • Identify unusual application activity
  • Flag inconsistencies early
  • Act as an additional checkpoint during refinances

Protecting Your Home Is Part of Smart Financial Planning

Mortgage fraud and title fraud are real risks in Canada, but they’re often preventable, and registered liens can serve as a practical safeguard. Reviewing your protections before a problem arises can help protect the home equity you’ve spent years building. Reach out to us today if you’re unsure whether your current setup leaves you exposed. A proactive conversation can make all the difference.

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