Housing valuations continue to climb, which means home equity has soared for homeowners… unless someone commits identity theft to steal that equity. Home equity theft, deed theft and title theft are on the rise, and many real estate and government officials fear it could have a major impact on homeowners in hotspots across the country.
In March 2021, the Philadelphia District Attorney’s office charged five individuals with allegedly stealing 10 rowhomes in an area undergoing gentrification. Two months later, authorities charged a Philly man with stealing 14 homes. Some properties were vacant for a long time, while others were still occupied.
So if you’ve been wondering, “Is home title theft a real problem?”, read on to find out everything you need to know about home equity theft.
Is Home Title Theft Real?
Home title theft is real and is a long-running form of identity theft. The FBI first warned about it in 2008, but soaring home values around the U.S. have added fuel to the fire because the high values are attracting identity thieves.
This scam has countless variations, but most commonly involves a fraudulent transfer of ownership followed by a fix and flip, a quick sale, or a property rental scam. Scammers also use 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 instead, she and her partners organized sales of the properties and pocketed the money borrowed in those sales. This is just one of many real-life examples of home equity theft.
Can Someone Really Steal the Title to Your Home?
Yes, and it’s easier than you might think. 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 altered a legitimate notary’s name.
Title theft is a form of criminal identity theft. For the grift to succeed, a con artist creates a profile of the homeowner by combing social media, online property records and other sources like the dark web to gather details about the homeowner they plan to impersonate. This is why it’s so important for you to protect your privacy online. However, that’s not the only place they’ll dig for information. Crooks will even ‘case’ a neighborhood, talking to area residents to learn even more about the targeted home and its owner.
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. Thieves often target seniors who have lived longer and have built more equity, but vacation homes and vacant houses are also targeted.
But it’s not just individuals who are targeted in home equity theft. Legitimate title companies who are targeted with phishing emails may share critical email login details and other data that aids the thief. The U.S. government estimates that title firm attacks surged 480% between 2015 and 2016 alone.
Is Title Insurance a Rip-Off?
Not necessarily, but it doesn’t do what you think it does. When you buy a home, the lender often requires title insurance to protect against problem titles, past liens and other issues that might have happened before you take ownership of your new home. The word “insurance” can confuse new buyers who think it also covers them against deed theft. An owner’s title insurance may protect against forgery, but you have to ask for these policies, as they’re optional.
Forged deeds alone can’t transfer property—but they can muddy the water. 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 associated with this issue can add up quickly for the homeowner.
Is Home Title Lock Necessary?
It depends on your needs, but there are better options available to you. Glossy TV ads now promote title lock services or title lock insurance, with one major firm using well-known celebrities and politicians to lure you in. But all title lock services do is periodically review court records—which you can do yourself. Plus, many don’t offer resolution services and 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.
Here are some other steps that can also 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. Make sure you store it somewhere secure.
- Check your credit reports frequently. The first indicator of fraud may be a rapid decline in your credit score or the addition of new accounts 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.
Other Ways to Protect Yourself
As a result of home equity theft, California now requires a thumbprint on notary forms to deter fraud. In five other 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 area may already offer this valuable service, or they might adopt this approach if local homeowners request it.
Homeowners who closely monitor their Personally Identifiable Information (PII) data make data profile building much more challenging for crooks. Dark web identity monitoring, personal data monitoring and credit report monitoring add additional levels of protection. 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. With an IDShield membership, you could have more peace of mind knowing you’ll discover the warning signs of home equity theft before it becomes a major problem for you and your home.
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.