The real estate market is stable in Toronto right now, but with a stable or booming market comes an increase in real estate fraud, namely mortgage fraud.
The Toronto real estate market is stable, but protect yourself against fraud.
There are two common types of real estate fraud: using “straw buyers” to voluntarily sign away their good credit by putting their name on a mortgage application for someone else who never ends up paying the mortgage, and the artificial inflation of a property’s value.
Avoiding The First Type Of Fraud Is Somewhat Easy.
In many cases, the perpetrator may overhear someone’s money troubles and offer them a large sum of cash, usually a few thousand dollars, to sign some mortgage documents. They may say that their associates don’t have the credit to qualify for the mortgage, but do have the money. So once the victim qualifies, they’ll take over and make all of the payments. A few months later, they’ve disappeared with the money and the victim is stuck with the mortgage payments.
Using your identity to sign for something you don’t intend to pay for is obviously a bad idea. Always have your legal counsel look over any documents that are real estate-related before signing.
For the second type of fraud, get yourself a buyer’s agent. Having a real estate agent of your own who will research the neighborhood property values and who understands the local market. If the property appears artificially inflated, they should be able to advise you that something isn’t right. As well, homebuyers can conduct their own appraisal to determine what the property is really worth.
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