Land Title Fraud
There seems to be a small epidemic of land title fraud in Ontario, Canada.
What happens is someone impersonates the homeowner, and then sells the house out from under him. The former owner is still liable for the mortgage, but can't get in his former house. Cleaning up the problem takes a lot of time and energy.
The problem is one of economic incentives. If banks were held liable for fraudulent mortgages, then the problem would go away really quickly. But as long as they're not, they have no incentive to ensure that this fraud doesn't occur. (They have some incentive, because the fraud costs them money, but as long as the few fraud cases cost less than ensuring the validity of every mortgage, they'll just ignore the problem and eat the losses when fraud occurs.)
EDITED TO ADD (9/8): Another article.
Posted on September 8, 2006 at 6:43 AM • 46 Comments