20 Items to Help Prevent Fraud and Forgery

5 February 2016

5 February 2016,

Off

While the volume of claims the title industry has paid has declined every year since 2010, fraud and forgery continue to be among the top sources for claims.

North American Title Insurance Co. (NATIC) created a CloseWatch program that rewards agents who identify fraud and forgery and play a significant role in preventing the consummation of transactions deemed to be fraudulent.

NATIC provided the following checklist of items to watch for in guarding against fraud and forgery:

Uninsured deeds, especially those recorded within the last 12 months
Releases, satisfactions or assignments of mortgages or deeds of trust, recorded within the last 12 months with no related sale or refinance
Unimproved or unoccupied property
Visibly altered documents
Last-minute change of ownership or lien additions or changes
Last-minute or unexplained powers of attorney or other last-minute or unexplained authority documents
Improper identification documents for transaction principals
All or virtually all sale proceeds or loan proceeds to be paid to borrower, with little or no money allocated to pay off a pre-existing loan
Sale with money back to buyers
Buyer walk-away transactions
“Flipping” real property
Requests for disbursement of seller proceeds to third parties
Funds passing outside of closing
Fraudulent or altered wire transfers and instructions
Unknown or unusual notaries; documents executed outside presence of notary
Quitclaim deeds of uncertain validity or with minimum transfer taxes recorded within the last 12 months
Intra-family or intra-company transactions
Payoffs to unknown or undocumented loan servicing agents
New customers or new business sources without reasonable explanation as to why agent suddenly got their business
Unexplained or unreasonable urgency or closing deadlines

According to NATIC, none of the items in the list are absolute indicators of fraud or forgery. In addition, a red flag does not necessarily mean that the transaction is fraudulent, but it does mean that a title professional should take extra steps to make sure it is legitimate. Title professionals that encounter any red flags should discuss the issue with their title officer, manager, supervisor or underwriter.

“The more red flags you spot in a transaction, the more caution is warranted,” NATIC warns.

This article has been used and reprinted with the permission of The American Land Title Association. The material is for general information purposes only and is not to be relied upon or used for any particular purpose. Title Industry Assurance Company, RRG and The American Land Title Association shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice.