Title fraud is a serious form of fraud that threatens to cost homeowners hundreds of thousands of dollars. This is a form of fraud that is becoming increasingly easy and common, and one that it is absolutely essential to protect yourself against.
Title insurance can help you to do this, as can a number of other important measures. In this post, we will examine title fraud in detail, and discuss the best methods for protecting yourself.
What is Title Fraud?
Home title fraud is fraud that results from someone obtaining the title of your property. This is usually achieved through identity theft.
Title fraud normally begins when a cyber criminal steals a person’s identity. They can do this by obtaining their personal details (address, name, bank details). From there, they will then be able to change the name on the title (which declares ownership of a property), thereby transferring legal ownership of the real estate to themselves.
The purpose of this move, is so that the individual can then take out a loan and use the homeowner’s property as collateral. This means that if the loan doesn’t get repaid, the lender will be entitled to possess the property to pay off the difference. Of course, the fraudster has no intention of paying back the loans – they simply use the property to take out as many large loans as possible, and then leave the victim to pay the difference.
The real homeowner often has no idea that any of this is happening until they begin to receive letters from the lenders – threatening to foreclose on their property. This is an extremely stressful experience, and one that threatens to leave the owner with no property and huge amounts of debt.
Is This Common? And Who is at Risk?
Home title fraud was once considered to be a very rare form of fraud. However, the availability of information and tools that can be used to extract that data make it easier than ever for skilled identity thieves to get away with the process.
This is a rapidly growing concern, and one that is costing homeowners hundreds of thousands of dollars every year.
This concern extends to all forms of wire fraud. In 2017, the FBI reported 301,580 instances of reported wire fraud, resulting in losses of $1.4 billion. The real estate and rental industry accounts for over 9,600 of those victims, totalling $56 million that year. This number has only grown.
Similar statistics from CoreLogic, show that there has been a 12.4% increase year on year. The analysis also estimated that one in 109 mortgage applications contained some signs of fraud in 2018. This is as compared with one in 122 the previous year.
Anyone who is purchasing property is at risk, and should take measures to protect themselves.
However, there are certain groups that are considered to be particularly vulnerable to this form of scam. Elderly property owners are one such group. The reason they are a popular target is that they are often assumed to be less savvy when it comes to data protection. At the same time, they are typically likely to own greater equity on their homes – meaning that the fraudsters can take out larger loans.
Also commonly targeted are those with multiple homes. Those who own vacation homes and second properties are assumed to have less time to attend to al the documentation relating to each property. Thus, they might be easier to fool in this manner.
How Does Title Fraud Occur
In order to combat title fraud, it helps to understand the process.
Home title fraud normally begins with identity theft. In order to change the details on the title, fraudsters need to first steal the identity of their intended victim.
That in turn normally means that they need to acquire documents and information about the individua. This can be accomplished through a number of methods:
- Rooting through trash is one of the most low-tech methods, but can still be very lucrative for a scammer. By finding old bills and letters that have been thrown out, they can then gain information such as bank details, name, address, and even maiden names. Some of this seemingly less-sensitive data (such as maiden names) can actually be highly useful for a hacker who may use that information to bypass security questions.
- Theft is also an option. Simply by stealing a wallet, a criminal can obtain huge amounts of information about a person. This can include everything from their social security number, to their passport number, and even their likeness!
- Phishing is another common technique that can be extremely useful for hackers and fraudsters. This involves making cold calls and sending emails posing as organizations. For instance, you might receive an email from PayPal, telling you that you need to update your details online. The link included in the email might then send you to another website that collects the private information you enter. Similarly, a caller might claim to be a government representative, or someone from your bank, and then begin asking security questions.
- Phishing is one form of hacking/cybercrime. However, there are many other methods that can be used by hackers to gain your private information. For example, “sniffing” involves sitting with a computer and connecting to a public WiFi. This then allows a tech-savvy criminal to listen to packets of data as they are sent to and from the modem. Should you log into an online bank account or any other account, the hacker can then obtain your information. Likewise, hackers might target websites containing databases full of customer information – meaning they never even have to interact with you in order to steal your identity!
How to Protect Yourself
There are a number of things you can do to protect yourself from title fraud.
One important step is to check your credit report. By doing this regularly, you will be able to lookup any recent financial action that has occurred in your name. This in term will allow you to see if you might have fallen victim to identity theft.
Another option is to try freezing your credit. This means that third parties will not be able to access your credit information. That in turn prevents loans from being taken out in your name. Lenders require access to credit reports in order to ascertain whether a potential customer is likely to be able to pay back their loan. If they can’t access this information, then the loan request will be denied. While not all cases of title fraud involve a loan being taken out in the homeowner’s name, many do! Fortunately, freezing your credit is free and doesn’t affect your score. This simply involves a call to the three credit reporting bureaus.
Equifax: Call 800-349-9960. You can also do this online.
Experian: Call 888-397-3742 or visit the website.
TransUnion: Call 888-909-8872 or freeze your credit through the website.
Make sure to look out for incoming bills. That means looking out for any bills that you should not be receiving, but it also means looking out for bills that are missing. If you don’t receive a bill that you are expecting, then this might mean that the post has been rerouted, or that it has been stolen.
It is also important to make sure you shred all documents containing personal information. This means things as simple as your name even and your address.
You can also check the information pertaining to your home using your county’s deed office. This will provide you with the confirmation that your property is still listed in your name. While you won’t be likely to do this regularly, it is a useful first step if you notice any unusual activity.
Be very careful when giving out personal information. Always check that the websites you are on are the official sites. That means the address in the URL bar should be precisely the same as the real thing, and it means there should be no obvious typos or similar on the site.
Interestingly, many scammers will actually include typos and errors in their phishing emails and website son purpose. The aim is to weed out people who are likely to pay close attention to details!
You should never click a link that asks you to enter your details. Most legitimate companies have a policy of never requesting personal information. Likewise, you shouldn’t give your information to someone who calls you. You shouldn’t even hang up and call back, as clever scammers can remain on the line!
If you are worried that account details need updating, then you should call the number yourself, or you should enter the website address manually.
Getting Help From Third Parties
If you are concerned that you may be at risk, then there are third party providers that can help to keep you protected against title fraud. These companies offer title insurance or title protection. The latter will lock your title, ensuring that it cannot be transferred. The former will insure you against the potential costs of being on the receiving end of this kind of fraud – though premiums can be expensive.
Always be sure to research the prospective companies and services first before doing business with them.
What to do if You Are a Victim
If you suspect you may be a victim of title fraud or identity fraud, then there are a few things you should do.
First, you should report the incident to the police. This is important if you are a victim of any crime, and will provide you with an incident number that you can quote in future.
You should speak with any insurance providers that you currently have title insurance with. You should also check your home information at the deed office.
You should then add a one-year fraud alert to your credit report and review the report at the same time. Notify the credit reporting agencies to resolve fraudulent activity on your credit report.
The sooner you detect the fraudulent activity, the more you will be able to contain and minimize the damage. Make sure to be vigilant when looking for unauthorized activity in your name and on your accounts, and take every step you can to prevent yourself from being a target.
The fortunate news is that this is still statistically a relatively rare phenomenon and if you take measures to protect yourself, most scammers will simply move on to “easier targets.”