Collaboration with partners and clients in the homebuying process are essential, says title insurance giant's CFO
Concerns about falling victim to financial fraud appear to be growing in the minds of many Canadians if the results of a recent Chartered Professional Accountants of Canada (CPA Canada) survey are anything to go by.
In that survey, released in advance of Fraud Prevention Month in March, the organization revealed a large majority of respondents (69%) as being more concerned about fraud than five years previously, with nearly half (46%) saying that they had fallen victim to fraud at some point during their lives.
Last year, Statistics Canada said the police had reported a sizeable increase in incidences of cybercrime across the country over the previous five years, from 24,000 in 2016, to 48,000 in 2019, and 63,000 in 2020.
It goes without saying that the risks of financial fraud are particularly acute for those involved in the mortgage and homebuying process – and Jennifer Ashton (pictured top), chief financial officer at title insurance giant FCT, emphasized to Canadian Mortgage Professional the need for homebuyers to remain vigilant and alert to protect assets and safeguard financial information.
Of particular importance is working with reliable and credible partners such as real estate agents, lenders, lawyers and inspectors, Ashton said – and homebuyers should feel comfortable asking for references or recommendations, confirmation of credentials and a thorough review of contracts before signing.
“Homebuyers will always benefit from being sceptical about all asks and transactions that have to do with their assets,” she said. “They should always trust their instincts. Homebuyers should question the legitimacy and proceed with caution if there is unnecessary urgency, forcefulness, or if the ask is unexpected. If they feel something is off, it likely is.”
While the increase in digital solutions in the real estate process has generated new opportunities for enhanced identity protection, Ashton also said that homeowners should keep in mind the comparative risks and benefits of using those technologies.
The risk of title fraud, which usually occurs when an individual’s identity is stolen to re-mortgage or sell a property, is another reason for homeowners to exercise caution and vigilance, according to Ashton, with title insurance an essential component of that.
FCT has identified title fraud as one of the three main fraud types affecting the real estate industry, alongside mortgage fraud (obtaining a mortgage from a lender under false pretenses) and value fraud, in which a property’s value is intentionally exaggerated to deceive lenders.
One of the most damaging effects of title fraud is the time and money it can take to restore the title, since it’s up to the homeowner to prove the fraud has occurred – and a property cannot be sold or remortgaged until the title is ultimately restored.
“Homeowners should also be cautious about where they share their personal information, such as on social media,” Ashton said. “Working with credible professionals to review all mortgage documents before submission is also an effective way to ensure documents are legitimate and potential risks are mitigated.
“If homeowners want to mitigate damages in the case of title fraud occurring, it’s important to ensure they purchase the proper insurance, such as a title insurance policy,” she added. “Title insurance will cover the legal expenses and many other costs that relate to restoring their title in the case of title fraud.”
Of course, the onus is also on all organizations involved in the homebuying process, not just their clients, to ensure they’re taking the steps required to safeguard the interests of each party. Ashton said “collaborative innovation” was required to bring key stakeholders together, driving enhancement of the process and creating a better overall experience.
That’s a particular priority for FCT, she said, which aims to partner with businesses to provide “transformational and secure” solutions and ultimately increase peace of mind for clients and partners alike.
She noted that the organization has an in-house certified fraud examiner specializing in early detection and prevention, something that she said ensures that customers, partners and employees keep fraud prevention top of mind and position themselves for security throughout the entire real estate transaction.
The good news on financial fraud and cybercrime is that companies are increasingly introducing written policies to manage cybersecurity risk or reporting. According to StatCan, 38% of large businesses in Canada had a cybersecurity insurance policy in 2020, up from 24% in 2017 – with fully 55% of businesses in the finance and insurance sector having such policies in place.