Jennifer Fiddian-Green has cleared her name with lenders.

She is not legally liable anymore for two mortgages that were taken out - without her knowledge or consent - on two condos in her home town of Brantford in 2003.

But the battle against mortgage fraudsters for most Canadians who have fallen victim to such scams is far from over.

As property values rise, reported cases of mortgage fraud are also increasing across Canada. But in many cases, police are handcuffed in their attempts to bring the culprits to justice.

Larry MacDougal, Business Edge
Fiddian-Green fell prey to a double mortgage-fraud scheme in Ontario.

"There was a charge laid against one of the individuals involved in my case, but the details of my case were not what led to the charge," says Fiddian-Green. "My case details got dropped (from the charge). It wasn't the best evidence, but there was a conviction ... but it's kind of like a slap on the wrist."

The experience was particularly irksome because Fiddian-Green, a forensic accountant and partner with Toronto-based Grant Thornton LLP, investigates fraud for a living. She can quickly check out someone who might be trying to pull a fast one with financial institutions.

"We know how to prevent this crime, and these groups need to be motivated to do the due diligence so that they know their client and who they're dealing with."

Fiddian-Green has filed a complaint with the Law Society of Upper Canada, which governs lawyers in Ontario, against the lawyer involved in both deals in her name. But with more than 75 mortgage-fraud cases to investigate, she says, the law society has indicated it can't review her situation anytime soon.

She has also filed a complaint against credit-reporting agency Equifax Canada because, she contends, people were able to access her personal financial data and get financial institutions involved without her consent.

"I didn't give permission to them, somebody else did," says Fiddian-Green. "So I want to know what work they are doing to protect my personal information."

When it comes to being victimized, she is probably one of the lucky ones because she knows who to call and how to get answers. Many other mortgage-fraud victims have faced years of hassles in dealing with banks, courts, professional organizations and other groups.

Typically, unscrupulous mortgage brokers, bankers, real estate agents, lawyers or appraisers may use false appraisals to increase the value of a property. They then sell it a few times through fake documents and other means to get a mortgage for a far higher amount than the real value of the property - and then disappear, leaving the unsuspecting purchaser to pay the bills based on what appear to be legally binding contracts.

And the stories of what unwitting victims go through are getting uglier.

A North York couple who lost their condo to identity thieves recently waged a legal battle in an Ontario courtroom with the Toronto Dominion Bank over who should pay a $247,860 mortgage. Claiming it was also a victim, the bank has refused to erase the debt and appears to be seeking compensation through a provincial assurance fund.

In one B.C. case involving disbarred former lawyer Martin Wirick, the provincial law society is on the hook for $50 million in clients-claim coverage. Wirick was granted a conditional discharge from bankruptcy in return for what's considered a $500,000 token judgement for the Law Society of British Columbia.

"Perhaps the only way that Mr. Wirick will ever pay anything to the law society is if he wins the lottery," B.C. Supreme Court Justice Jon Sigurdson said in his June 27 decision.

Wirick, who specialized in property transfers, received money in trust to discharge mortgages and later admitted to the society that he breached undertakings in several of the transactions. Those breaches had resulted in money remaining unpaid to various parties and financial institutions.

Dozens of lawsuits allege that Vancouver developer Tarsem Singh Gill, a long-time client of Wirick's, bilked tens of millions out of homeowners through bogus mortgages. Clients later learned they did not own their own properties.

A law society audit determined that $52 million passed through Wirick's trust account between 1998-2002. Police are still investigating, and no charges have been laid.

Later this month, a case against six men will go to court in Edmonton on what is believed to be the largest mortgage-fraud case in Alberta history, which includes 142 charges involving 118 properties and involves just under $30 million. But Gohar Pervez, the group's alleged leader, has claimed the accused - who include Edmonton defence attorney Scott Park - weren't doing anything illegal as they flipped properties.

In another Alberta case, an 85-year-old couple who had enjoyed clear title on their property for 25 years faced the loss of their home, says Edmonton police Det. Mike Shorter, who investigates mortgage fraud full-time.

These are just a few of the cases now going before the courts or being investigated. First Canadian Title, a Toronto-based property title insurance company, estimates the average mortgage fraud to be $300,000. In 2005, mortgage-fraud claims accounted for 33 per cent of First Canadian's total dollars paid, compared to only six per cent in 2000.

"The lenders are basically falling over themselves to finance these things, and I think there's been a lack of due diligence on all avenues of it," says Shorter.

In the Pervez case, which Shorter has been investigating for three years, somebody always thought someone else - be it the bank or mortgage broker - was doing the background checks.

"When you look at these red flags jumping up, it's just someone passing the buck," says Shorter. "The economy is over-heated and people are just doing everything to finance these things - and they're just taking advantage of it."

Although it's difficult to get an accurate read on the extent of mortgage fraud, various reports suggest Alberta has the most cases because of its booming economy and strong real estate market.

Last year, the Real Estate Council of Alberta estimated the value of mortgage fraud at approximately $275 million a year.

On mortgage assumptions, says Shorter, there is no legal requirement to get the consent of the lender. A fraudster can get a "straw buyer" to assume a mortgage, collect the cash from the bank and then get off the hook.

"It's hard to tell which values are good and which aren't, because what people are paying for houses now is nuts compared to what they were paying 10-15 years ago," says Shorter.

Part of the problem, he contends, is the province's land titles system and private registry setup.

"I've had (two) cases where someone has gone into land titles with forged documents and pushed them through to change title," says Shorter.

After obtaining the title fraudulently through forged signatures, the fraudster took the title document to a lender to obtain mortgages. The victim wouldn't know of the ownership switch unless he happened to check the title.

"The problem here is, with the system they have in place, you pay a fee for them to process it," says Shorter. "If you find out after the fact that someone's fraudulently taken the title out of your name, you have to go to court. You have to initiate civil action to reverse it. You have to incur the court costs and you have to get a civil restraining order or place your own caveat onto title to try and tie it up. The system is almost geared to being customer-driven. There are no checks and balances."

Shorter says police, who face long investigations because of the many different parties they have to interview, are limited by a lack of resources and lenient fraud laws. As a result, Edmonton police made "a management decision" not to investigate mortgage fraud for about five years.

But given the sheer size of some of the frauds - and large volumes of money involved - investigators realized mortgage fraud could no longer be ignored. Now, says Shorter "something's got to be done" to deter mortgage fraudsters.

(Monte Stewart can be reached at monte@businessedge.ca)