How To Protect Your Home Title From Deed Theft

Nowadays, there is an increase in offensive real estate fraud, with potentially disastrous outcomes for homeowners. The practice known as deed fraud or house title theft involves an online scam for a fraudulent transfer of property ownership. Then, in order to make money, thieves can either sell the house, get a mortgage on it, or even rent it out.

Home title theft can cause significant financial loss for individuals and families. Additionally, the psychological and emotional impact of becoming a fraud victim can be harmful. Public awareness and education are the first steps in safeguarding property ownership. The more people understand the potential risks and report the fraud - the smaller possibility they become a victim.

Countermeasures for online fraud require cooperation between legal attorneys, local government, and private investigators. In this article, we will elaborate on deed fraud – how to identify it, how to react, and how to restore your home ownership.

What is Deed Fraud? An In-Depth Explanation

The real estate scam known as a deed (title) fraud occurs when a fraudster unlawfully transfers the ownership or the property title to themselves or another party without the consent of the rightful owners. Title fraud typically includes vacant homes that are not the homeowner's primary residence.

The main way to perform a home deed theft is to falsify the deed. Without the consent of the actual proprietors, the criminal unlawfully transfers ownership of the house. In essence, the fraudster steals your house and, without your knowledge, either sells it or obtains a loan against it. When the mortgage is not paid, the property goes to foreclosure.

Common Methods to Commit Deed Fraud

When committing title fraud, scammers typically target particular categories of homeowners, such as elderly or vulnerable homeowners, owners of vacation or rental properties, victims of identity theft, and owners of paid-off properties.

First, the fraudster locates a property, usually one with equity, that they wish to take. After that, they falsify the paperwork to give themselves ownership of the residence. Upon filing the necessary paperwork with the appropriate authorities, they become the property's legal owners.

Subsequently, they either sell the property to unsuspecting parties or obtain home equity lines of credit (HELOC), secured by the property and fail to repay them. Some offenders have also obtained several mortgages secured by the property.

How Deed Fraud Occurs: Common Tactics and Techniques

Once the target has been identified, the forgery can take various forms:

• Impersonation of landowners (identity theft). Thieves could pretend to be property owners by using stolen personal information. Then, without the owner's knowledge or approval, they could sell the home, refinance the mortgage, or transfer the title.
• Fake deeds and forged signatures. To transfer ownership to themselves or a bogus entity, fraudsters may falsify property deeds or titles. After that, they can either sell the property or borrow money against it.
• Fictional buyers and fraudulent notaries. Scammers persuade the homeowner to sign documents, often under the pretense of refinancing or selling the property, and then take control of the equity.

Identifying Deed Fraud: Warning Signs to Watch For?

Deed fraud can occur in different forms. You should be attentive in the following situations:

• Unexpected changes in property records. From time to time, you should check your property record.
• Receiving legal documents or notices related to property ownership.
• In case you get a notice that a loan was taken on your property without your knowledge.
• You received a recorded document on your property, but your signature was forged and you never signed it.
• Irregularity in property tax statements timeline (e.g. stop receiving property tax bill).

Real-Life Example: Case Study of a Deed Fraud

A community activist in Detroit, Michigan was charged in February 2024 with a particularly heinous crime. Zina Thomas, 60, was accused by federal prosecutors of stealing over 30 properties in and around the city by creating fake deeds that transferred the properties to fictional companies before selling them to unsuspecting buyers.

Thomas was the director of homeownership programs for the charity United Community Housing Coalition at the time of the alleged thefts. A study from a title company estimated that 90 percent of deed fraud is carried out by family members or friends of the victim. The remaining 10 percent of cases involve criminals who target the victims.

In the Detroit case, deed fraud involved quitclaim deeds, which are simple legal documents that transfer ownership without any guarantees about the property. Upon that - victims can face multiple consequences:

• Property sold to a legitimate buyer and making a profit. This is a common approach for unoccupied vacation homes or rental properties.
• Renting out the property and taking regular monthly payments from unsuspecting tenants.
• In the victim's name, open a home equity line of credit (HELOC). In this way, the scammer can get equity from the victim's house and stop making loan payments.
• Refinance the mortgage to cash out the equity (known as a reverse mortgage scam).

Legal Aspects of Deed Fraud: Laws and Protections

There are several laws on property fraud – both on the federal and state levels. The main goal of this legislation is to empower law enforcement agencies, particularly the Attorney General and local District Attorneys, to intervene in legal proceedings related to property ownership when investigating cases of deed fraud.

These laws allow them to temporarily halt eviction proceedings, ownership disputes, and foreclosures during ongoing investigations. Courts are mandated to grant these halts when there’s an active investigation or criminal actions underway. Also, the laws empower prosecutors to nullify fraudulent sale and loan documents.

Additionally, the legislation ensures that investigations into deed theft are not impeded by ongoing legal disputes. The impact of this legislation also extends to mortgage lenders. With its implementation, these entities must be vigilant about potential deed theft cases, thoroughly review documents for fraudulent activity, and anticipate the temporary halts enabled by the law.

Role of Title Insurance in Protecting Property Owners

Title insurance covers 3 main types of issues: title, off-title, and transactional. It protects property owners and lenders against financial losses from title problems. A difference between title insurance and home insurance is that it covers the risks from past events, not possible future issues.

Acquiring title insurance typically occurs during the property closing process and serves as protection in case the property's title registration is delayed. It can mitigate certain risks, ensuring your transaction closes smoothly. You can still get a policy later if title insurance wasn't needed during the closing process.

Legal Recourse for Victims of Deed Fraud

Federal, state, and county governments provide support in case of deed fraud. Residents can verify deed information through the County recorder of deeds website (online parcel viewer in some counties).

Together with the deeds recorder – the victims should report to the County sheriff, or police department, as well as the Prosecutor’s office.

In some places - nonprofits and property attorneys provide eviction and foreclosure prevention assistance by offering free counseling services for residents who own a home at risk of property fraud.

Preventative Measures: Protecting Yourself from Deed Fraud

There are several steps to verify property deeds (ownership records). You can prove ownership when filing a claim:

• Property tax statement: Tax statements are the best form of current proof of ownership, and in most cases, the easiest to obtain. If the tax statement does not list a physical street address, supporting documentation can be utilized to prove the physical address.
• A deed or official record: Original deed, deed of trust, warranty deed of the property. A utility bill can also be included.
• Mortgage documentation: Mortgage statement, mortgage promissory note, or the closing disclosure form.
• Structural or real property insurance document, bill, or payment record.

Regular Monitoring of Property Records

Deed fraud protection is not covered by your HOA, homeowner's policy, or the banks. The FBI advises the homeowners to be vigilant. You should take these precautions to guard against home title fraud:

• Read all letters you receive from a mortgage company, even if your name is not on it. Find out what’s in them and follow up to get more information.
• Periodically check all information about your property through your county's deeds office. You can do this for free or for a small fee.
• To protect against identity theft - use strong passwords, and be cautious when clicking on links or attachments.
• If you own a vacation property, have someone check it regularly to see if there are any for sale signs or unauthorized activity at the property.
• Subscribe to professional monitoring services (title companies and attorneys).

The professional services monitor home title activity and provide alerts if there is a title change, but only after it has occurred. These services usually don’t cover the legal fees and other costs to clear the fraud from your home title. You should estimate if their service is worth the money. (You can obtain property ownership records for free in most counties.)

Responding to Suspected Deed Fraud: Immediate Actions

You must take immediate action if you have been the victim of house title fraud. Speak with the financial institutions to request a freeze of any funds that scammers may obtain. Call the deed recorder in your county and mail them the necessary paperwork.

Next, you should contact the FBI, the Federal Trade Commission (FTC), and the local authorities. Title insurance may cover fraud during your closing; check your policy with them to find out. Finally, get in touch with a knowledgeable lawyer who can assist you in taking the required legal actions.

To seek legal assistance and restore rightful ownership you should:

• Seek Legal Counsel: Consult with an attorney specializing in real estate and property law. They can guide the legal steps to take to protect your interests.
• Notify Your Lender: If you have a mortgage on your property, inform your lender about the fraud. They may also be able to provide advice or assistance.
• Notify the Land Registry: Contact your local land registry office to report the fraudulent activity. They may not be able to restore the title, but they can prevent any further unauthorized transactions.

In 2020 FBI reported over 13,000 victims of deed fraud with losses totaling over $220 million. That’s why it’s important to be vigilant and undertake proactive measures to prevent deed fraud.

First – you should stay informed and take preventive steps to protect property ownership. Experts say the most important thing property owners can do is monitor the property they own, live in, or have an interest in, especially if it is vacant. They should also occasionally check all information about the property through the local county’s deeds office.

For further protection – you could affiliate with related services or products (e.g., identity monitoring, legal assistance). Identity theft protection services can assist in uncovering indications of fraud and identity theft by monitoring your personal data online. Many services also monitor your credit and bank activity to flag any suspicious transactions. Some of the services that can restore your identity if it’s stolen include IDStrong, LifeLock, IdentityForce, etc.