Underwriters flag emerging trends in suspicious real estate transactions: FCT

Underwriters for FCT, which provides title insurance, noticed a more pronounced trend towards a greater number of suspicious real estate transactions at a lower dollar value in 2013.

For both residential and commercial real estate transactions, the amount of mortgage funding sought in transactions flagged as suspicious is getting smaller, at the same time the incidents are more frequent, notes a statement from FCT, a group of companies based in Oakville, Ont. that provides title insurance, default solutions and other real-estate-related products and services.

The statement was issued Friday, during Fraud Prevention Month.

2012 marked the first year FCT began reporting its incidents of suspected commercial frauds in an effort to alert owners, lenders and their legal advisors about the growing incidents of commercial fraud, the statement notes. The average for a potential loss to a commercial lender was $3.5 million in 2012, while the amount had dropped to slightly more than a $1 million potential loss one year later.

Eric Haslett, vice president and chief underwriter for FCT, notes that “transactions where real estate fraud is suspected by our underwriters still constitutes less than 1% of our overall business.”

FCT reports that, in 2008, the amount of mortgage funding sought in a flagged residential transaction was $600,000 on average. By 2013, the average had dropped to $360,000.

Noting the value of flagged suspicious residential frauds is dropping, Haslett suggests “fraudsters may be trying to slip smaller transactions by us as they may believe that a higher value mortgage may be subject to greater scrutiny.”