Judge chides bank in mortgage fraud
Couple’s identity stolen, home lost but TD not ‘innocent victim,’ judge says
Excerpt from an article by Harold Levy - Toronto Star
Ontario is experiencing a “serious mortgage-fraud plague,” says a judge who released a blistering decision yesterday that chastised the Toronto-Dominion Bank for failing to detect a scam that left a North York couple without their home.
In a decision seen as precedent-setting, Superior Court Justice Randall Echlin ruled that Seyed Aboulgasm Rabi and his wife, Shohreh Shafiei, were the innocent victims of fraudsters who stole their identity, transferred the family condo behind their backs to an accomplice, then placed a $250,000 mortgage on the property, took the money and disappeared.
In bold, unequivocal language, Echlin nullified the mortgage, saying the couple “did nothing in any way to bring this nightmare upon themselves” and that the bank was not, as it had portrayed itself, an “innocent victim” of the crime.
Although the bank admitted that the Rabi-Shafieis were innocent victims of a “sophisticated fraud” — the couple did not learn about the fraudulent transactions until long after they had occurred — it argued that under a 2005 Ontario Court of Appeal decision, the fraudulent mortgage became legally valid and enforceable once it was registered on the province’s land-title system.
But Echlin noted: “Ontario is currently experiencing a serious mortgage-fraud plague. This action involves one such fraud.”
Toronto lawyer Morris Cooper, who represents the Rabi-Shafieis and several other victims of mortgage fraud in Ontario, described Echlin’s ruling as “a remarkable precedent-setting decision.”
“This is the first time we’ve had a court address in such depth what the judge describes as the ‘plague’ of mortgage fraud in Ontario,” he said.
Cooper said the decision will “undoubtedly” be considered by the Ontario Court of Appeal when it reviews its controversial earlier ruling at a special hearing on Nov. 28.
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