As a homeowner, you need to be aware of crime on the rise known as real estate title fraud. Sadly, the only red flag for title fraud occurs when your mortgage mysteriously goes into default and the lender begins foreclosure proceedings. Even worse, as the homeowner, you are the one hurt by title fraud, rather than the lender, as is the case with mortgage fraud.
Unlike with mortgage fraud, during title fraud, you haven’t been approached or offered anything – this is a form of identity theft.
Here’s what happens with title fraud: A criminal – using false identification to pose as you – registers forged documents transferring your property to his/her name, then registers a forced discharge of your existing mortgage and gets a new mortgage against your property. Then the fraudster makes off with the new home loan money without making mortgage payments. The bank thinks you are the one defaulting – and your economic downfall begins.
Following are ways you can protect yourself from title fraud:
- Always view the property you are purchasing in person
- Check listings in the community where the property is located – compare features, size and location to establish if the asking price seems reasonable
- Make sure your representative is a licensed real estate agent
- Beware of a real estate agent or mortgage broker who has a financial interest in the transaction
- Ask for a copy of the land title or go to a registry office and request a historical title search
- In the offer to purchase, include the option to have the property appraised by a designated or accredited appraiser
- Insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house or meth lab
- Ask to see receipts for recent renovations
- When you make a deposit, ensure your money is protected by being held “in trust”
- Consider the purchase of title insurance
It’s important to remember that if something doesn’t seem right, it usually isn’t – always follow your instincts when it comes to red flags during the home buying and mortgage processes.