Mortgage Fraud: Enforceability Of Mortgage

Following registration of the mortgage, the borrowers fell immediately into default of the loan. The insured lender sought to enforce its mortgage and two of the borrowers filed a defence and cross claim alleging they had no knowledge of the loan and were victims of a fraud perpetrated by the third co-borrower, who was related to them. The borrowers sought orders that the loan be declared invalid and unenforceable and be set aside in full and the mortgage discharged.

The Resolution - Stewart indemnified the insured lender in accordance with the “duty to defend” coverage under the Residential Lender Policy. Stewart instructed lawyers on behalf of the insured to defend the proceedings brought by the borrowers. The insured was successful and the borrower’s defence and cross claim were dismissed, allowing the insured to enforce its mortgage. Stewart Title covered all legal costs in obtaining judgment in favour of the insured. The borrower’s have now appealed. Under the policy Stewart will be responsible for all legal costs and expenses in resolving the issue on behalf of the insured lender.

To make a claim or enquire about a claim related issue, please contact our Claims Department on 1800 300 440 or by fax on 1300 881 432.