Sunday, September 10, 2006

Laws To Protect Homeowners Just A Start

Regarding Ontario's new laws to "protect" homeowners from fraud:

The laws fail in one important aspect - they do not fine the bank that approved the mortgage to a faulty title in the first place. In the case shown in the article, a simple phone call to the house would have prevented a lot of hassle to the rightful homeowner. Fining fraudsters is great - only if you can catch them. The article says the person taking out the mortgage 'disappeared'. In this age of documentation and computerization, how did the bank give a mortgage to a fraud? And who will stop the bank as they now try to harass the proper homeowner.

The new 'laws' are just tinkering. The fault is with the government-run land titles registration system, and there seems to be no change on offer there [Star].
Currently, the law provides that fraudulent property transactions based on bogus mortgages, land transfers, and powers of attorney are considered lawful by the courts as soon as they are registered under the province's land titles system.

Because of that defect, homeowners may find themselves on the hook for mortgages fraudulently put on their property without their knowledge — instead of the banks and the mortgage companies.

Homeowners may also discover to their horror that they are in danger of losing their properties permanently to people who bought them from criminals without knowing of the fraud.
The government should amend the Land Titles Assurance Fund, which should also provide legal help to victims of land fraud. The fault is with the failure of the government's run land registry system - so why should victims pony up the cash for legal fees? Cases take a long time to settle as well - leaving legal homeowners in limbo.

In going after the fraudsters, will the law also tackle the lawyers who prepared these fake legal documents? After all, you need a lawyer to affect a land transfer.
Actress Elizabeth Shepherd, whose Leslieville home was recently stolen by criminals who rented the property and then put a large mortgage on it using forged documents, said she "resented" having to go through "this expensive and cumbersome process for seeking compensation.

"I don't see why I should be one cent out of pocket," she said. "It's not my fault. The bank is responsible for handing out mortgages without due diligence."

Shepherd said her quest for compensation is "draining. It is extremely time-consuming and I have to spend so much time researching the situation and meeting with my lawyers."
At best, this is a start. The government should not now claim 'job done'.

1 comment:

Jason Bo Green said...

It's a confusing issue (the new law, not the problem) to me - thanks for this terrific rundown.

These victims are being further victimized by red tape and bureaucracy, and forcing the banks to pony up would only make them more cautious in the future.