Ontario announced plans to increase mortgage fraud penalties and urged Ottawa to amend the federal criminal code to protect homeowners.

The Liberal government is tabling legislation this fall that raises the maximum penalty for real estate fraud convictions from $1,000 to $50,000, said Government Services Minister Gerry Phillips. He said that the province is also seeking the creation of a national database of real estate fraud cases and urged Ottawa to re-classify the fraud as a separate offence under the federal Criminal Code.

Ontario has taken steps to make the province's driver licences more difficult to counterfeit so false identification can't be used to get the fraudulent deals. The province has also created a land title insurance fund.

The land title system is not capable of protecting itself from the registration of fraudulent documents, he said, "and those documents will continue to be used to defraud people of millions of dollars over the course of years to come."

There is no central registry in this country, and it's a crime the banks don't like to talk about. However, one estimate by the Quebec Association of Real Estate Agents and Brokers says mortgage fraud could be worth $1.5 billion a year.

There may be only 10 claims a year against the fund out of two million real estate transactions in Ontario, Philips conceded. But police and homeowners say title and mortgage fraud is growing.

If adopted, the proposed legislation would prevent a homeowner from losing ownership when someone registers a falsified mortgage, makes fraudulent sale or counterfeits power of attorney. The title would be restored to the victim and the falsified document revoked.

A provincial government task force was set up after several cases of title fraud came to light.

The courts had enforced the lien by handing the house over to the con man to cover the phony debt. Dehmoubed didn't find out until the con man put the house on the market and a "for sale" sign went up on his on his lawn.

In another case that involved identity theft, Jennifer Fiddian-Green got a call from a mortgage company telling her she was behind in her payments. Without her knowledge, a fourplex and a house in Brantford, Ont. had been bought in her name and Fiddean-Green owed nearly half a million dollars for properties she had never seen, and for a mortgage she had never applied for.

The fraud is easy to commit. Once a crook sees a house he wants, he simply files transfer of ownership papers at the provincial Land Titles Office. Much of the time, no one there will even verify the signature.

While the courts usually return the houses to the victims, they have also ruled that the victims are responsible for the mortgages that were taken out fraudulently.

Edwina Baniqued