Paying off my Mortgage - How to protect myself?

[Steve98]

Hi,

I'm rather happy to be at the end of my mortgage. I'm concerned about identity theft, title fraud, etc... I think I heard someone recommend getting a home-equity-line-of-credit as a protective measure to stop title-transfer? What about existing-owner title-insurance? My house is now worth more than the coverage offered by the title-insurance I purchased when I bought the house. Who are the right experts to talk to in this situation?

Thanks in advance.

[dontplaywithfire]

although identity theft can occur, it's mostly a marketing scam so that equifax can sell you protection and insurance against such a rare incident, similar to how credit card companies try to sell you insurance on this and that.

[MarcFromOttawa]

I wasn't aware people were more susceptible to identity theft once the mortgage is paid off.

[Steve98]

I wasn't aware people were more susceptible to identity theft once the mortgage is paid off.

My understanding is that it's more challenging for title to be transferred if there is a mortgage attached to the property - hence the recommendation to attach an (unused) HELOC to the property.

I don't know this for sure - which is why I'm asking for advice.

[BryceS]

I do this for clients.

We setup a nominal amount of a secured line, as to not affect the ability to get future credit, at something like $30,000.

This ensures that it is essentially impossible for title fraud to happen.

[Mark77]

If a person doesn't want to go to a bank and take out a mortgage/HELOC (even if undrawn), would registering, say, a million dollar mortgage charge against a property, in favour of yourself, do the trick?

No bank or lender on this planet would want to be a 2nd mortgage to a huge charge like that, on an unclean title.

[BryceS]

If a person doesn't want to go to a bank and take out a mortgage/HELOC (even if undrawn), would registering, say, a million dollar mortgage charge against a property, in favour of yourself, do the trick?

No bank or lender on this planet would want to be a 2nd mortgage to a huge charge like that, on an unclean title.

Yes.

[dougboswell]

Identity theft is not a scam but a very elaborate scheme pulled off by 1 or more persons. There was one incidence where an older couple were mortgage free. A trio got together -someone in the lands title, I believe a lawyer and probably a mortgage agent. By searching through properties they found this property. They got documents forged and then applied for a mortgage. By asking for less than 50% LTV the lender if they did an appraisal at all would have been a driveby. Thus nobody talked to the rightful owners. They got the mortgage, took the funds and left. The rightful owners knew nothing until they got legal letters from the mortgage company telling them they were behind in payments.

[Steve98]

If a person doesn't want to go to a bank and take out a mortgage/HELOC (even if undrawn), would registering, say, a million dollar mortgage charge against a property, in favour of yourself, do the trick?

So, would this be recommended over the HELOC approach? It sounds like it should be much more of an encumbrance than a nominal HELOC. I don't need/want the LOC, so it's a protection vs. costs decision for me.

Does this provide an actual benefit over title insurance? I'm under the impression that the combination of title insurance plus Ontario bill #152 makes it very unlikely that I would lose title, and in that very unlikely case I would be compensated fully. Or is just "peace of mind" insurance so I know I won't have to go through the fight?

[BryceS]

So, would this be recommended over the HELOC approach? It sounds like it should be much more of an encumbrance than a nominal HELOC. I don't need/want the LOC, so it's a protection vs. costs decision for me.

Does this provide an actual benefit over title insurance? I'm under the impression that the combination of title insurance plus Ontario bill #152 makes it very unlikely that I would lose title, and in that very unlikely case I would be compensated fully. Or is just "peace of mind" insurance so I know I won't have to go through the fight?

Mark's suggestion gives you peace of mind that nothing will happen. It will cost ~$150-200 at a Lawyer.

HELOCs can sometimes be setup for free but you'll need to borrow and pay interest on $20 to $30,000 for a few months. ($200ish)

Title Insurance + Bill 152 are reactive solutions instead of proactive.

[redsilk]

Just wondering if this is common practice?

[brunes]

Hrm, this is news to me, and I paid off my mortgage last year. I have no LOC currently. Is this recommended to do? In NB we are under a land titles system, does that help or hinder things for the possible thief?

FTR, I already have identity theft insurance included along with my homeowners policy. However if the simple act of opening a HELOC will offer protection at near zero cost, I will do that.

[brunes]

I'd like an update to this thread - is this common practice? Is it worth it to get one of these and pay the lawyer fees, vs. juet getting title insurance?

[gman]

I'd like an update to this thread - is this common practice? Is it worth it to get one of these and pay the lawyer fees, vs. juet getting title insurance?

The bigger question is: do you need HELOC for other reasons?
Another question is: can you get it free instead? e.g. I never pay any fee to have that set up.
The third question is: will you sell your property in the foresee future and what is the answer of question one? If you sell the property, you will need to discharge the HELOC and there is a discharge fee. Okay, that depends on the province too. Ontario, there is discharge fee. Alberta, may be no discharge fee.

[TrevorK]

Just a thought but some people claim that being mortgage-free provides a discount on their home insurance so you'll have to take in that savings as "lost".