Scammers Want Your Home's Equity. Learn How They Get Their Hands on It
Welcome to "How They Do It," a monthly feature on the IDShield blog. Our goal is to provide you with glimpses into the hidden world of hackers. You'll learn the many ways they operate so you can guard your identity and your assets.
Housing valuations continue to climb, so home equity has soared for owners. Unless, of course, someone commits identity theft to steal that equity. So-called deed theft or title theft is a scheme that many real estate and government officials fear could increase – especially in big city hot spots – leaving some homeowners in a state of shock and panic.
Prices are up, and boards on the windows of abandoned homes are coming down as once overlooked neighborhoods transform. In March 2021, the Philadelphia District Attorney's office charged five individuals with allegedly stealing ten rowhomes in an area undergoing gentrification. Two months later, authorities charged a Philly man with stealing 14 dwellings. Some properties were vacant for a long time while owners still resided in others.
Deed Theft Isn't New
The concept is not fresh – the FBI first warned about it in 2008 – but soaring values around the U.S. have added fuel to the fire since hackers always go where they can make good money. There are many variations on this scam, but it generally involves a fraudulent transfer of ownership and then a fix and flip, a quick sale or renting the properties. Scammers also employ Home Equity Line of Credit (HELOC) loans to squeeze cash out of these "stolen" homes.
In one early case investigated by the FBI and IRS, a real estate professional in Los Angeles pled guilty in an operation that defrauded more than 100 homeowners and lenders for over $12 million. The woman promised to help struggling owners lower their mortgage payments, but she and her partners instead organized sales of the properties and then pocketed the money borrowed in those sales.
How They Do It
Forgeries are essential in most deed scams. In numerous investigations, notaries whose names appeared on legal documents swore their signatures were fraudulent. In some cases, scammers simply altered a legitimate notary's name slightly.
This is significant criminal identity theft. To succeed, a con artist constructs a profile of the homeowner. Thieves comb social media, online property records and other sources like the dark web to gather robust details about the individual the thief plans to impersonate. Crooks will even case a neighborhood, talking to area residents to learn even more about the home in their crosshairs and its owner of record.
In most instances, fake deeds are filed with a city or county property records office. The actual owner could be deceased or still living at the address. Crooks often target seniors who have lived longer and probably built more equity. Vacation homes and vacant houses are targeted, too.
Legit title companies swamped with phishing emails may cough up critical email login details and other data that aids the thief. The U.S. Government estimates that attacks against title firms surged 480% between 2015 and 2016 alone.
If mortgage payment demand letters arrive, the genuine owner experiences alarm, confusion, and panic.
Need to Know
When you buy a home, the lender often requires title insurance to protect against problem titles, past liens and other issues that might have occurred before you assume ownership. The word "insurance" can confuse new buyers who think it also covers them against crimes like deed theft. Owner's title insurance may protect against forgery, but these policies are optional.
In truth, forged deeds cannot transfer property. However, they can muddy the water significantly. When a property deed is part of a scam, lawyers and judges often need to restore it to a "free and clear" state. Legal expenses add up quickly.
Glossy TV ads now promote title lock services or title lock insurance. One major firm advertises heavily using well-known celebrities and politicians, but, in essence, the service reviews count records periodically. You could, too. Many don't offer resolution services. Further, their monthly fees run as much as a comprehensive identity monitoring plan.
Identity theft lies at the heart of deed abuse. The best way to dodge ID theft is to protect your personally identifiable information, or PII.
These steps could reduce your risk of deed abuse:
- If you have an actual deed in your possession, don't leave it where guests or workers can see it. Secure the document appropriately.
- Check your credit reports frequently. The first indicator of fraud may be a rapid decline in your credit score or new accounts in the file you never opened.
- Check your county records deeds to see if the information is viewable online. Many agencies have switched to digital records that are searchable and include a chain of title.
California now requires a thumbprint on notary forms to deter fraud. Other locales need to catch up. In five states, deeds to transfer property now require witnessing by disinterested parties.
The City of Philadelphia launched Fraud Guard Alerts in 2019 to address the rash of deed theft in that city. It provides alerts when new documents are submitted as a "simple way to monitor your land records and warn you of potential property fraud." Records offices in your locale may already offer this valuable service or might embrace the concept if local homeowners request it.
Homeowners who monitor their PII closely make data profile building much more challenging for crooks. IDShield scours the internet and dark web 24/7 plus many additional data repositories to detect the theft or misuse of any private information and alert its members promptly.
IDShield is a product of Pre-Paid Legal Services, Inc. d/b/a LegalShield (“LegalShield”). LegalShield provides access to identity theft protection and restoration services. For complete terms, coverage, and conditions, please see an identity theft plan. All Licensed Private Investigators are licensed in the state of Oklahoma. This is meant to provide general information and is not intended to provide legal advice, render an opinion, or provide any specific recommendations.
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