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HOUSE THEFT The Latest Real Estate Scam

Identity theft and m ortgage fraud are v ery com m on, but com bined they lead to a new threat loom ing in today s m arket: house theft. From inform ation on the FBI website, house theft is becom ing m ore com m on. Unlike identity theft, the fraudster does not need y our social security num ber, or any other priv ate inform ation. All they need to do is record a fraudulent deed. This is m uch easier than im agined. In the past y ear, at we hav e seen an increasing num ber of docum ents recorded without the knowledge of the property owner. The problem com es from the process of changing property ownership. Real estate title is transferred from one party to another by the use of a deed. The docum ent is not a regulated form , and not a legal docum ent until it is recorded at the records offices. In m ost counties, a blank warranty deed can be purchased at any office supply store, or downloaded from the internet. The form is filled out with the property inform ation, and signed by the owner transferring it to som eone else. The signed deed is presented to the county recorders office where it then becom es a legal docum ent, and is ev idence of new ownership. Once the deed is filed, it is easy for the new owner to do any thing with the property ; rent it, sell it, or m ortgage it. In som e cases the crim inal will get a m ortgage on the property , and pocket the proceeds. In other cases they will offer the property for sale and collect the sale am ount, or at least the deposits. A v acant hom e can be used to collect rent pay m ents. Luxury v acation hom es are often targets, as reported on last y ear in the Robb Report. Ev en chruches are not exem pt from being targets, as this article from New York reports. The problem is that the gov ernm ent sy stem is not in a position to v erify the signature on ev ery deed. If an executed deed is presented to the clerk, and it appears to be in the right form at, and hav e the correct inform ation, it is recorded as being legal. In som e cases, a v igilant clerk m ight notice som e irregularity about a person or docum ent, but this is well bey ond their responsibility in m ost cases. The indiv idual clerk cannot be expected to know ev ery signature for ev ery hom eowner. Also, in m ost states there is no requirem ent for any notice to be sent to a property owner upon a transfer of deed, or placem ent of a lien or m ortgage on their property . With budget cuts and an explosion of foreclosure activ ity , there are no extra peronel to search old docum ents to m atch signatures. And ev en then, y ou would need a qualified signature expert. How does a thief get a m ortgage? They usually target hom es which are free and clear to begin with. By only asking the lender for a sm all am ount, such as 1 0% 2 0% of the ov erall v alue, they can often get away with little or no docum entation. In som e cases, they can av oid prov iding em ploy m ent inform ation, or ev en a social security num ber. We ran a title search for a client in Maricopa County AZ, where a m ortgage was placed on a m ans property by the prior owner. He had obtained the m ortgage approv al while still an owner, and waited until the sale went through. Once he got his sale proceeds, he took out a new m ortgage on his old house, effectiv ely getting paid twice for the property . Many county records offices recom m end checking y our property title on a regular basis, to m ake sure the deed is still in y our nam e, and that there are no m ortgages or liens that y ou do not know about.