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Title of this Tale.  Mortgage Fraud!

The Toronto Sun (Toronto, ON)
Thursday, October 31, 2002
Section: Finance
Byline: Linda Leatherdale, Money Editor

It's not just skyrocketing energy bills threatening our homes. 

Fraud artists are also targeting our biggest asset, freely able to rip off our home's title, put the deed in their name, then reap the windfalls of refinancing and walk away with the money.

 Just ask Sarkis Asailian. The owner of York Appliance on Avenue Rd. was shocked when his Royal LePage real estate agent called him up and asked if he had sold his home. 

A month earlier, Asailian had listed his mortgage-free, five-bedroom home at 189 Ridley Blvd. with the agent at an asking price of $750,000. "If it sold, wouldn't you know?" he asked his agent. 

What alerted his agent that something was wrong was a transfer of the property's deed from Asailian's name to a Markus Falkenberg on Oct. 24. "I never signed anything. I never sold my home," an upset Asailian said. 

After alerting his family lawyer and the fraud squad, a probe showed this crook used a fictitious name of Falkenberg, and with forged documents was able to go to the City of Toronto's land titles division to transfer the deed of Asailian's home to his name.

Documents show the crook paid the registrar a $70 registration fee, plus $9,475 in land transfer taxes. But the trail of evidence doesn't stop there. Once the crook had the deed to Asailian's home in his hot little hands, off he trotted to a mortgage broker to apply for a $467,000 loan against the mortgage-free home. 

The broker shopped the loan to Home Trust Co. "We gave him a commitment we would do the deal, subject to an appraisal, proof the home was free and clear, a verification of income, and an explanation of why he needed the money," said Nick Kyprianou, vice-president of mortgage lending. 

The appraisal came in close to $750,000, the home was free and clear, but the deal began to fall apart when credit checks showed this Falkenberg had no credit rating at all. 

Alarm bells also went off when the crook, who claimed to be in the financial consulting business, said he swapped land he owned for his partner's home, because his partner wanted to develop his land. 

DISCREPANCY 
His story gets even more interesting. The crook also told Kyprianou that he had done a similar deal on another home, and a major bank gave him $400,000. 

Home Trust's lawyer, meanwhile, discovered there was a discrepancy over who Falkenberg listed as his lawyer in the real estate deal. 

Yes, there was such a lawyer, but when contacted he did not remember a client called Falkenberg; nor did this lawyer complete contracts manually. His were done electronically. 

What was even more suspicious was within five minutes of talking to the lawyer listed on Falkenberg's contract, a person called Home Trust, identified himself as the lawyer and said the Falkenberg deal was fine. 

Then the mortgage broker arrived at Home Trust and claimed his client was on his way in to clarify everything. The client -- or should I say crook -- never showed up. "We may end up the heroes in this story," said Gerry Soloway, president and CEO of Home Trust, who denied this crook any money, which means there is no mortgage against Asailian's home. 

Other victims, though, aren't so lucky. 

Still, Asailian now faces a legal bill of $10,000 or more to go to court and have his name returned to the deed. 

Real estate lawyer Alan Silverstein, who warns this type of fraud is growing, said Asailian may be compensated through Ontario's Land Title Compensation Fund.

$250 PREMIUM 

But the biggest protection of all for homeowners is title insurance.

Unfortunately, though, only buyers of homes, and not existing homeowners, can apply. Cost is a one-time premium of about $250, plus PST, "which covers not just fraud, but a host of things," said Wayne Lipton, vice-president of Stewart Title Insurance.

Lipton warns mortgage fraud is a growing crime, with his firm paying out $1.5 million last year to compensate lenders who were victims. The mortgage industry claims losses are now as high as $300 million a year in Canada, and $2 billion in the United States.

 "If a crook robbed a bank for $10,000, it's front page news. But here crooks get away with $500,000 or more and it doesn't get barely any attention," Soloway remarked.

 Silverstein added: "It's time government clamped down." 

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