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CA FCT strengthens underwriting guidelines

Property Here - Tuesday, May 14, 2013

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First Canadian Title (FCT), a provider of title insurance, recently revised its guidelines to track growing incidents of commercial real estate fraud.

In past years, FCT says it has primarily reported on residential real estate fraud – fraud committed against homeowners and their lenders – in order to advise the public on how to protect themselves from becoming victims of real estate fraud. In 2012, with growing incidents of commercial frauds, FCT is now alerting purchasers of commercial properties, commercial lenders and their legal counsel about the increasing number of incidents.

“In 2012, FCT’s commercial underwriting team suspected fraud in commercial transactions valued at $28 million. These frauds represented a tiny percentage, less than one per cent of the commercial deals that FCT underwrote in 2012. However they average a potential $3.5 million loss to a commercial lender, so the impact of one commercial fraud can be substantial,” says Eric Haslett, vice-president and chief underwriter at FCT.

In contrast, FCT suspected fraud in residential deals that were valued at a total of $23.5 million. The average suspected residential fraud is estimated at approximately one-tenth the value of an average suspected commercial fraud, the company says.

“While I don’t want to tip off fraudsters as to what we are tracking, I will say that we are particularly concerned about transactions involving vacant commercial land. We subject these deals to extra scrutiny,” says Haslett.