Perhaps the only bonus of the pandemic has been the ability to work from home, making living in expensive homes or condos near our urban office towers unnecessary. And that’s why some people are choosing to move away from the city.
A report released by earlier this year noted that as many as 50,000 people are choosing to move out of Toronto into the surrounding suburbs, for instance. This has resulted in a sudden increase in interest in the Canadian real estate market where supply for such properties is outstripping demand. On top of that, many families are struggling to keep their homes amidst the unemployment and pay cuts caused by COVID-19.
Unfortunately, this has created the perfect situation for scammers to take advantage of vulnerable homeowners.
To help first-time homebuyers and existing homeowners, here are some common scams that our real estate lawyers in Mississauga want you to watch out for.
Unethical Real Estate Scams to Watch Out for in Ontario
When searching for a property to purchase or rent, avoid common scams by following these guidelines.
1. Foreclosure Relief Scam
A homeowner who falls behind on their mortgage payments may become desperate to save their home. This presents the perfect opportunity for scammers with access to information on public homes in the pre-foreclosure process to swoop in and offer ‘relief’. While they claim to be helping, they take advantage of the homeowner’s vulnerability by asking them to make a large upfront payment they claim will reduce their mortgage. However, this often leaves their clients in a much worse financial state than they were.
In the wake of the challenges created by the pandemic, foreclosure scams are on the rise. And while the government is taking steps to address the issue, many banks are also working to deal with the distress their borrowers are facing.
One of the best ways to avoid these scams is to work directly with your loan service provider to actively modify your loan. You may alternatively request forbearance and make other arrangements with your loan provider.
2. Title Fraud
In this scam, fraudsters assume the identity of the homeowner and pose as them. They go on to assume the title of the home, obtain a mortgage, or even sell the property.
You can protect yourself from such scammers by never giving out confidential information over the phone or through email unless you know who you are dealing with. Before sharing any personal information, make sure you know how it will be used. Remember, if something sounds too good to be true, it usually is.
Also, pay attention to your financial billing cycle and follow up with creditors if you don’t receive your bills on time. Review your credit card report to see if someone has opened unauthorized financial accounts in your name. There are two credit card reporting agencies in Canada you can use for this: TransUnion Canada and Equifax Canada. Both websites allow you to request free credit card reports which will be emailed to you. You may also subscribe to various agencies that will monitor your credit and report suspicious activities related to your account.
3. Mortgage Fraud
This term is applicable in cases where untruthful lenders try to get money from unsuspecting buyers; they may also pitch mortgage terms outside of the buyer’s means. There are several warning signs of such frauds listed on the Financial Services Commission of Ontario website. For instance, fraudulent lenders will request upfront payments and cash fees.
It’s best to only trust accredited financial institutions with your loans and mortgage but only after you have researched them to ensure their legitimacy before signing any contract. As mentioned, if the terms seem too good to be true, they probably are. This is why you should use online mortgage calculators that will allow you to get an idea of the type of mortgage you can afford. Before discussing anything with the lender, conduct thorough research to ensure the terms being set are reasonable.
If the lender is trying to rush you, be extra careful by taking as much time as you need to respond to any emails or calls. If you feel unsure or pressured, remember that you have many options. You can ask family or friends to recommend lenders to ensure you won’t be tricked. This will also help you avoid negative future consequences.
Real estate scams are an unfortunate reality too many homeowners have endured and learned about the hard way. This is why it’s best to only work with qualified professionals you know you can trust. By familiarizing yourself with the common warning signs, you will be able to protect yourself. Hopefully, this blog by our real estate lawyers in Mississauga has helped you understand what to watch out for. If you feel like someone is trying to take advantage of you financially, contact the authorities immediately.