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(From the Financial Literacy Blog) – Many individuals aspire to own their own land and/or home, and they likely spend many years working hard to make that dream a reality. However, scammers are targeting property owners more and more, resulting in detrimental consequences for owners whose property is unknowingly sold from underneath them.
What Is Deed Fraud?
On April 1, the Boston Division of the Federal Bureau of Investigation (FBI) warned property owners and real estate agents about a steady increase in reports of quitclaim deed fraud. According to the FBI, this type of scam (also known as home title theft) involves “fraudsters who forge documents to record a phony transfer of property ownership” to “then sell either the vacant land or home, take out a mortgage on it, or even rent it out to make a profit, forcing the real owners to head to court to reclaim their property.”
Criminals can benefit financially from deed fraud in a variety of ways:
- Use the property as collateral to apply for home equity loans or lines of credit in the owner’s name—borrowing against the home
- As is common with homes that are unoccupied and vacant for periods of time, such as vacation and rental homes, scammers may rent the property out without the owner’s knowledge, gaining funds on a home they pay nothing towards
- Sell the properties they use in their scams, taking the sale money themselves and leaving the true owner and “buyers” both at a loss
- Refinance the mortgage to cash out the equity
Effects of Deed Fraud
The FBI also notes that deed fraud typically involves a level of identity theft, as personal information is obtained and used to assume the victim’s identity and steal their property. Those committing deed fraud do so by obtaining personally identifiable information, including full names, addresses, passwords, driver’s license numbers, Social Security numbers, and more. Once they have this information at their disposal, they use it to impersonate the victim with fake IDs and answers to security questions by submitting forged documents to financial institutions, home title companies, and even the county recorder’s office to trick a notary into transferring the property’s ownership. They may also pose as the landowner to meet with potential buyers. Regardless of what they do with the information, it puts significant funds into their hands and leaves the victim(s) facing devastating, costly circumstances.
Deed fraud falls under the larger real estate fraud category, and the FBI notes that between 2019 and 2023 alone, more than 58,000 victims reported over $1.3 billion in losses due to real estate fraud. Within the FBI’s Boston Division alone, 2,301 of those victims lost more than $61.5 million. However, it’s important to note that the losses are likely far higher, as many victims are either embarrassed or do not know how/where to report this fraud—and in some cases, the victims may not even be aware they have been scammed.
Ways to Protect Yourself
As with all fraud, there are steps individuals can take to protect their personal information; this is the first line of defense in staying safe from scams. By following these simple steps, you have more control over who obtains this information:
- Use strong passwords (and ensure they are different for each account’s login)
- Do not overshare online—social media especially
- Secure your physical documents and sensitive information
- Monitor for any kind of fraud on an ongoing, regular basis by checking your credit report for suspicious activity (like new loans in your name)
- As always, when in doubt, do not give any information out
Additionally, for deed fraud specifically, make sure you have home title insurance. Your policy can help pay legal fees and defend your right to stay in your home in the event of fraudulent claims against your ownership. Contact your title company for assistance with pricing and signing up. You’ll also want to keep an eye on your property, reporting any strangers coming and going to the police—especially for any non-primary residences you own. Installing security cameras and asking nearby friends or family to check on the place are great ways to stay alert. Stay on top of your mail and note any bills that stop arriving or change suddenly and be careful to avoid posting on social media when you are or will be away from your home for periods of time (like vacations).
While this is not implemented in every Maine county, those who outright own their property can sign up for title alerts on the Maine Registry of Deeds website. You can also set up online search alerts for your property and should regularly monitor online property records.
Given the changes in many procedures due to the COVID-19 pandemic, which allowed real estate transactions to be completed through email and over the phone, remote sales opened new avenues for scammers to commit these crimes. Realtors have steps they can take, such as avoiding remote closings, asking for copies of utility bills that only property owners would have, only doing in-person identity checks, and more.
What Should Victims Do?
Fighting to maintain ownership as a victim of deed fraud can be a long, expensive process that can take years to sort out with all of those involved (the unknowing buyer, mortgage companies, and other lenders). Victims should call their lender’s fraud department and contact the three main credit bureaus (Equifax, Experian, or TransUnion) to enact credit freezes. All unauthorized accounts in your name should be closed.
If you suspect fraudulent activity, report it through the FBI’s Internet Crime Complain Center at www.ic3.gov. An identity theft claim should also be filed with the Federal Trade Commission, and a report should be filed at your local police department using your ID, proof of address, documents demonstrating home title theft, and the FTC identity theft claim. You should also keep track of all correspondence and documents related to the theft. This will be helpful in the event of a lawsuit or other legal action. If the criminal succeeded and carried out title theft, the victim should seek legal help.
As always, Maine’s credit unions are here to help. If you need any assistance at all, please contact your local credit union.