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OUR COMMUNITY HAS a Facebook-like online forum called Nextdoor. I tend to ignore the posts, which usually involve things like items for sale and new restaurant openings. But a recent post caught my eye—because it was from the Montgomery County Recorder of Deeds.
The article said Pennsylvania’s Attorney General had initiated a lawsuit against a realty company for deceptive practices targeting elderly, low-income and minority homeowners. The realty company was offering a “Homeowner Benefit Program” that gives homeowners anywhere from $400 to $1,000 upfront to lock into a contract. The contract is for 40 years and is recorded as a mortgage, often unbeknownst to homeowners. When they go to sell their home, they’re sued and forced to pay a termination fee of between 3% and 6% of the property’s value because they attempted to sell their home through another broker.
I’d grown curious about such things because of an earlier mailing we’d received, which had pitched a “home title lock” service that would protect us against home title fraud. I couldn’t believe that was even a thing. Home title fraud is the transfer of ownership of your home title to a criminal, who files the proper documents with the local authority to assume legal ownership of your property. How could that happen? Apparently, the county clerk who verifies that documents are filled out correctly doesn’t verify that the property sale is accurate.
Criminals seeking to perpetrate this fraud typically focus on vacant homes, rental properties and vacation properties. Some are so brazen that they’ll even target properties with the homeowners still in them. The criminals forge documents to transfer legal ownership to themselves. They then sell the property to unassuming third parties or take out equity lines of credit against the property with no intent of paying back the money borrowed.
What recourse do homeowners have? They’ll typically have to pay huge legal fees to clear up the crime with the parties involved, which might include a title company, lender, and a buyer or seller. They’ll probably also have their credit score negatively affected. How common is this theft? Not very, but senior citizens and property owners who have had their identities stolen are most vulnerable.
Real estate fraud is a growing phenomenon. Figures from the FBI report 11,578 cases in 2021 totaling $350 million, up from 9,654 cases in 2017 at a loss of $56 million. So far, title fraud is a small portion of that.
Having read about home title fraud, I was half-tempted to sign up for HomeTitleLock.com’s service, which costs “only” $19.95 a month. The site says it has an alert system and would work with customers to resolve the matter if they’re victims. Thanks to the Nextdoor article, I found a free service offered to Montgomery County, Pa., homeowners. FraudSleuth is a free property alert tool provided by our Recorder of Deeds Office. It will send out an email alert if something is recorded against your property.
If you aren’t fortunate enough to live in a state with such a service and don’t want to pay for one, the FBI suggests the following: Be sure to open all mail from your mortgage company. Follow up on any information and periodically check information related to your property through your county deed office. Checking may be free or you might have to pay a fee. Don’t recognize something? Be sure to look into it.
Sonja Haggert is the author of Invest, Reinvest, Rest. You can learn more at SonjaHaggert.com. Follow her on Twitter @SonjaHaggert and check out her earlier articles.
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Hello Lady Sonja, I’m sorry for the late answer to your great article. This is so cool. I did research in my Denver county and they do have an alert service, Fraud Sluth I subscribed too.
I also made a Next Door post to that effect and someone wanted to know my source. I gave them, the community your article to read.
You are famous!
I would hug you if my arms were long enough! 😉
Life is ours to make!
I find this fascinating. I can have the original title to my property in a safe deposit box and someone can get a loan/sell the property without my knowledge. Seems the bad of the internet beginning to outweigh the good.
The county clerk can only verify that the information is in the right format for the type of form being submitted. They will dutifully file any errant piece of nonsense. Absent an actual alerting service HELOCs and Transfer on Death Deeds can trigger notifications to beneficiaries including notice of contractor liens.
So where are the title companies in this scam? They collect big bucks for title insurance every time a property is sold. But are at arm’s length when there is a fraudulent theft of said property they also verified?
Sonja, thanks for this. I read that this service: Choose a County (propertyfraudalert.com) is offered by many counties, including quite a few in my state of Texas, but not ours. I just emailed our County Clerk to ask if she’d consider offering it.
Thank-you Sonja! The crooks and scammers continue to find new ways to steal. I just signed up for my residence and two rental properties. Great tip. Will you browse Next Door messages a little more now? I read the headlines to decide if I want to read postings.
Yes, Jeff. I will look at Next Door a little more closely.
We have a HELOC. We do not draw from it. It is a form of “title insurance”. If anyone tries to illegally transfer the title, the bank will be notified.
A lawyer recommended this. Especially if you have a paid off mortgage.
Great to know. We also have a HELOC but rarely use it.
Interesting aspect of a HELOC that I wasn’t aware of. However, having a HELOC in place also has risks. I know of a situation where a senior was scammed out of $200K due to a HELOC. Long story short, the scammers (posing as a company) convinced the victim that the victim had accidentally pulled pulled $200K out of their company (ie. scammers) account and put the $200K into the victims account. Sure enough, when the victim looked in his account he saw $200K he didn’t expect to see. This convinced the victim that the scammers were telling him the truth. However, the $200K that had “appeared” in the victims account actually was from a HELOC that the victim had in place and which the scammers had been able to use to put $200K into the victims account without the victim knowing that’s where the $200K came from. Hence the victim “believed” the scammers story that the $200K belonged to the scammers and subsequently followed their instructions to transfer the money back to them. The bank, police and FBI were all notified, but the money was never recovered and the bank wouldn’t cover it since the victim actually transferred the money to the scammers. So there is some potential risk to having a HELOC in place.
Interesting. It makes sense that this would cover you, since the bank has a vested interest.
Systems for managing property title in most counties are antiquated so not surprising to hear motivated people are exploiting that. I check details for our property each time I pay the property tax bill online. A free monitoring service with reliable notifications would be awesome.
Thanks! I was completely unaware of this potential issue. I just checked and our county government office also offers a free service on their website and I immediately signed up for it. I then crafted an email to make my relatives and close friends aware of this. It’ll be interesting to see how many of them were already aware of this. It’s interesting to note that signing up for the free service only needed an email address and the property parcel number, which actually easily allows someone to sign someone else up for the free service.
It’s my understanding that titling a home as an asset in a revocable living trust can reduce the chance of title fraud due to the additional transaction complications involved and the fraudster’s desire to avoid them.
Thank you, Sonja. You jogged my memory of a notification for a property fraud alert service offered by my mother’s county clerk of court in Florida. I failed to follow-up, but will do so this week.