Title Companies Beware, Home Title Theft has Increased
The brazen scam of home title theft is on the rise, and victims’ stories suggest that traditional industry safeguards are not adequate. Home title theft is essentially a form of identity fraud, as individuals forge documents to impersonate the rightful property owners, allowing them to sell the property or secure loans using it as collateral. Unfortunately, title agents can unknowingly play a role in enabling these criminal acts.
Owners of vacation homes or undeveloped land are prime targets for these schemes. Homeowners who have fully paid off their property (with no outstanding liens) can also be vulnerable. Criminals pose as the property owner, change the address for correspondence and conspire with an unscrupulous notary. Due to the number of steps required to perpetrate these scams, fraudsters are becoming increasingly sophisticated.
According to the FBI’s 2022 Internet Crime Report, 11,727 individuals in the US racked up real estate losses of $350 million due to fraud. While this is still a tiny percentage of the roughly 87 million homes owned in the US, home title theft is on the rise and the industry should take notice.
Business Insider tells the story of an Arizona man who planned to build his retirement home on a plot of land he bought 20 years ago. It was only by chance that he discovered it had been sold for $200,000 without his knowledge. While the crime is shocking enough, the frustration, finger pointing, and costs he incurred trying to reclaim his home were devastating.
To right the wrong, the victim had to fight with the real estate company, title company, county recorder’s office, and title insurance company – with each group claiming they had no liability.
One victim lamented that his scammer provided less documentation than it takes to cash a check at a local bank! Realtors and title companies are taking more steps to verify identities – particularly for vacant land sales. These measures range from asking for multiple forms of ID to holding Zoom meetings and sending letters of verification to the property address for the owner’s approval.
Title companies should revisit their policies in light of these cautionary tales. Review this topic along with procedures and documentation practices, and make sure your errors & omissions insurance is current!
