We’re dedicated to creating connections among industry professionals through our Market Insight Forums. The most of which was dedicated to creating a dialogue about how real estate, legal and mortgage professionals must remain vigilant against increasing fraudulent activities. Teranet’s Senior Vice President of Commercial Solutions, Tim Rye, asked our panel of industry experts questions about the role technology has in combatting and advancing fraud, red flags that industry professionals can look for to identify fraud and how we can work better as an industry to prevent this increasing issue.
Cameron Field, Vice President of Vidocq Group, Christine Xu, Mortgage Broker Level II and CEO, MoneyBroker Canada, Lori Swartz, Legal Counsel at LAWPRO and Christine Kemp, Broker & Accredited Senior Agent at RE/MAX Rouge River Realty LTD Brokerage started the forum with a discussion about the role that technology is having in mitigating fraud.
Christine Xu shared that while new technology has increased efficiency, it has also made fraudulent activities easier. For example, while early in her career, fraud was detected manually, today, fraudsters can quickly alter documents using technology. Lori Swartz echoed these concerns, pointing out that AI’s rapid evolution means the legal sector faces a constant need for training and adaptation. Cameron Field emphasized the danger technology poses, as fraudsters can now easily create convincing fake identities and documents. Christine Kemp noted that convincing fake documents have become a significant hurdle for real estate professionals. The potential for fraud to outpace the positive uses of technology is a major worry for all professionals in our industry.
Tim then asked the panelists to share some common signs of fraud the audience should be aware of:
- Christine Xu shared that a common red flag that may make a mortgage professional want to dig a bit deeper occurs when borrowers are very urgent and visit a mortgage broker last minute for financing on a property.
- Another warning of fraudulent activity may be when a borrower refuses to meet in person or show up with the ID that would be required in the early stages of a mortgage transaction.
- Lori Swartz suggested collaborating with other lawyers, mortgage brokers and real estate professionals if you are approached by someone that approaches you urgently for the purchase of g property in a different part of the province or country. If, for example, you are in a different part of Ontario from where the property is, and you may not be familiar with the properties in that area, you may want to engage a lawyer that is more familiar with the area for advice.
- Christine Kemp stated that fraudulent clients tend to be evasive about personal details and resist ID checks, offering inconsistent or unclear backstories. Real estate professionals should be aware that fraudulent clients often send proxies to property showings and avoid in-person meetings. They are reluctant to share information about their lender or lawyer, and communication with these parties is often limited to email.
When asked to share his perspective on the impact of fraud Cameron Field highlighted the serious implications of mortgage fraud, particularly its role in money laundering for organized criminal groups that disrupt national security and support human trafficking. Additionally, Cameron emphasized the reputational risks for individuals involved in mortgage fraud, noting that many real estate firms have faced fines for poor anti-money laundering controls.
The forum ended with examples of fraud that each of our panelists had encountered:
- Christine Xu shared a story of a potential fraud attempt that involved an elderly man who called urgently needing $300,000 for his son, offering an off-market property worth $800,000 as collateral. Despite the property having no mortgage and a good loan-to-value ratio, Christine’s team asked the client for an appraisal and to meet with a lawyer, which the client resisted, claiming mobility issues. After paying for the appraisal and a legal deposit, the client never followed through and the deal was never completed. Christine highlighted how this situation fit common fraud patterns: emotional appeals, urgency and reluctance to meet in person.
- Lori Swartz stated that an emerging sign of potential fraud is a sudden increase in business from one source, such as a new client referring multiple people, an agent sending many deals or a mortgage broker offering urgent requests. Lori noted that fraud attempts are becoming more frequent, with daily claims being submitted during this period of economic downturn and increased desperation.
- Cameron Field shared that fraudsters often use social engineering to overwhelm brokers and agents, pushing them to act quickly, additionally, some fraudsters have become highly skilled at manipulating customer service representatives to gain access to bank accounts.
- Lastly, Christine Kemp shared an example of a young man trying to sell his father’s farm property without his consent, using a forged power of attorney. Christine also shared a fraud scheme where properties were sold at inflated values to justify second mortgages or refinances, bypassing traditional appraisals and red flags.
We would like to thank Cameron Field, Christine Xu, Christine Kemp and Lori Swartz for sharing their time and expertise with us. If you were unable to attend the virtual Market Insight Forum or would like to re-watch the session you can access a recording below.
