Department protects homes from more fraud

A Government department has taken steps to safeguard Auckland houses owned by victims of a string of mortgage frauds by putting special stipulations on property titles.

The Registrar-General of Land, Robbie Muir, said the Government department he heads, Land Information NZ, put caveats on the house titles to stop fraud recurring.

This means no one, including the victims, can raise a mortgage against the houses and the victims would have to go through a legal process to have the special orders removed or sell their properties.

A thief assumed the victims' identities and fooled banks and lawyers into thinking she owned the houses. She stole $540,000 in just a few weeks, using the identities of three homeowners to complete the crime.

Mr Muir said the victims welcomed the help.

"The caveats are notices on the titles which prevent any further dealings with those properties," he said, explaining that he used special provisions of the Land Transfer Act 1952.

West Auckland lawyer Don Thomas, who unwittingly helped the thief by acting for her on one Mt Albert house deal, praised LINZ for helping the victims.

"Land Information suggested this," Mr Thomas said, explaining that it was a highly unusual move. LINZ sought no payment for making the changes.

Although the victim of the Mt Albert fraud had not lost any money, she was extremely distressed by the situation. Mr Thomas said caveats registered against the titles of her Auckland houses meant it would be impossible for anyone to perpetrate the fraud against her again.

Late last year, a woman posing as the homeowner stole three amounts of $180,000 from three different lending institutions in Auckland. She had documents proving she was the owner of three mortgage-free houses. In the Mt Albert case, she told Mr Thomas she needed to raise the money for renovations and a holiday and left only a cellphone number and email address for contact, specifying that no mail should go to the house she claimed to own.

She also told Mr Thomas she did not want her family to know, but he said it was relatively common for clients to instruct that they did not wish their families to know what they were doing. So it was plausible that the thief had also asked not to be telephoned at home.

A false passport, bank statement and tax certificate fooled the lawyers and lending institutions into loaning the woman $540,000, which was placed in six bank accounts. The thief withdrew the money fast, well before the alarmed banking officials found out what had happened.

Mr Thomas is worried about the possibility of others committing the same crime, citing a loophole in the system.

Lawyers checking the identity of new clients are often being refused help by organisations citing the Privacy Act, he said. Faced with the same situation again, he would double-check the identity of a new client with an employer or Work and Income New Zealand.

"But if you can't positively identify someone, we might have to say we can't act for them," he said.

Auckland District Law Society professional standards director Andrew Burger also criticised the system, saying Mr Thomas had done all that could reasonably have been expected to check the woman's identity. He called for a system to be established to enable lawyers to check identities and said that without changes, the frauds could continue.