
Mortgage scams are quite prevalent in Canada and can affect unsuspecting seniors the most. A lot of mortgage scams start with Identity Theft and are avoidable with the right education. Here are the top mortgage scams to look out for in Canada in 2025.
Real-Life Example: Title Fraud in Toronto
Stephanie and Derrick, a Toronto couple, faced title fraud firsthand. Their home was sold without their knowledge while they were overseas. Upon returning, they found strangers living in their house, who had legally purchased the property. The fraudsters had used fake identification with minor discrepancies, like misspelled names, to carry out the sale. Although the couple had title insurance, it did not cover the full value of their loss. It also did not cover the emotional trauma they endured. (Source The US Sun)
Title Fraud
This type of fraud occurs when your identity is stolen. Then they use that stolen identity to transfer the ownership of your home into their name. They then might sell the property or take out another mortgage against it without you knowing it. You have no idea that anything is wrong until you get notices for missed payments or your house is sold right from under you.
Foreclosure Rescue Scams
This type of scam involves a scammer pretending to be a ‘foreclosure prevention specialist’. The scammer offers to help save your home in exchange for transferring ownership of the home to them. Once they have control, they can sell the home and leave you homeless and still in debt.
Reverse Mortgage Scams
This one is specifically a scam against seniors. A reverse mortgage occurs when you own a significant portion of your home. This means you are well into your mortgage, but it isn’t fully paid off yet. You want to borrow against the value of your home, the equity it has gained over the years. A reverse mortgage is a loan against the value of your home. You can use it however you choose; you could use it for renovations, or simply travel the world. The loan is typically only paid off when you either sell your home, move, or pass away.
The reverse mortgage scam is when you deal with scammers. They might take the money from the reverse mortgage and divert the funds for their own use. In some cases, scammers use stolen identities to secure reverse mortgages on properties they don’t own. You might not find out until you go to sell your house, and there is a lien on it.
How To Protect Yourself
- Always work with licensed professionals. Ensure that the mortgage broker, real estate agents and lawyers are licensed and in good standing.
- Never give out personal information to anybody, this will protect against identity theft
- Review documents carefully, have a lawyer you know and trust to review them. Be wary of pressure to sign quickly or without a full understanding
- Obtain Title Insurance. This can help protect you from certain types of fraud, including title fraud. Be aware of your coverage and limitations.
If you are worried about being a victim of a mortgage scam, you can take action. Request the Land Title and Survey Authority to pull the Duplicate Indefeasible Title Certificate (DIT). You can also ask them to secure it. This effectively freezes the title and prevents unauthorized changes.
Always work with trusted, licensed professionals. This is crucial when dealing with anything as serious as your home, mortgage, and life savings.