For example, Home Title Lock’s website has no details on what they provide beyond the ‘alert’ if a title is changed or if there are irregularities on titles.
Title fraud protection simply offers to monitor for home title activity and provides alerts if a title change has occurred or an irregularity exists – but only after it has occurred, so it does not prevent it.Īlso, it appears to offer no real assistance if someone successfully uses forgery to steal your title. It is important to remember that this is not ‘insurance’ nor is the term ‘lock’ legitimate in fact, they are both misleading. What benefit does home title insurance actually provide? Interestingly, lender’s insurance, which is usually a part of closing costs when a loan is taken out, pays the lender in cases like these making it easier to reconcile the problem, although there may be some legal costs associated with the cleanup. The deed is fraudulent, the scammer never actually was the homeowner, and the lender has no legal claim on your property to satisfy the fraudulent borrowing. If this were to happen, and the perpetrator was able to take out a loan and receive cash using the property as collateral, the rightful owner would be under no obligation to repay the loan. Title transfer requires multiple verifications, and the perpetrator must successfully execute false identification, forgeries, notary fraud, involve straw buyers, and so on. If you have aging parents, multiple and/or vacant properties, or a large amount of equity in the property, the risk is higher, but we believe still quite low due to the fact that all fifty states and the District of Columbia require multiple documents to transfer ownership of real estate which prevent this from happening.
If you have a loan on your property, the chance of this happening is near zero. If there is an incumbent lender when a scammer tries to retitle the property, the lender is on the deed and will need to approve any transfer of title and the existing loan will have to be paid off. When there is not a mortgage on the property.When we drill down it is clear that the instances of home title fraud are very low and usually occur in very specific situations: Sounds scary, but these statistics include all different types of real estate, rental, and timeshare crimes, with only a small fraction of cases involving home title fraud. In just two years, this number grew to almost 12,000 victims with losses totaling over $220 million. In 2017, the FBI reported over 9,600 real estate and rental fraud victims with losses totaling over $56 million. Home title insurance purchased at the property closing only protects from irregularities that occur before the date of purchase but does nothing for events that occur afterward. Home title fraud would more aptly be called deed fraud as it seeks to change the home’s title on the deed. It contains a detailed description of the property and is signed by the seller who conveys the title to the buyer who also must sign. The deed is the physical document that conveys the title to the new owner when a home is sold. When you have title to a piece of real estate you have rights associated with the property: Home title fraud occurs when a scammer changes ownership of your home to another name by forging your name on a deed, filing it in the records room of your county courthouse, then takes out a loan using the home as collateral.Ī title denotes who has legal ownership of a home. This can be a confusing issue and, as with many financial subjects, there is a lot of noise and hype, so here is our take. This is no doubt due to the non-stop ads warning about this very scary threat. Many clients have asked us about title “insurance” or “locks” that claim to prevent losses and wonder if they should be protecting themselves from home title fraud.
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