FROM THE EXPERT: Taking Homes from Unsuspecting Landowners
By Mikko Lindberg, research associate, CSG Southern Legislative Conference
A new scheme involving identity theft is running parallel with the overall rise in mortgage fraud cases in the U.S. Deed fraud is becoming an increasing concern for local, state and federal officials. Also labeled as house stealing by the FBI and land fraud by the Property Records Industry Association, deed fraud is a ploy where a criminal takes ownership of a residence, pulls out the equity of the property and disappears, leaving the actual owner or owners of the residence to deal with an outstanding mortgage.
According to the FBI, the process goes like this:
One or more cons begin by picking out a viable house, preferably vacant, such as a rental or vacation home.
They next do some basic Internet research on the public records of the owner of the property and use that information to create fake Social Security cards, driver’s licenses and other forms of identification.
The criminals then go to a local office supply store to pick up the forms for a property transfer.
Using the fraudulent forms, they visit the local registrar of deeds office, file the forms, and, in the eyes of the law, become the rightful owners of the property.
If everything goes according to plan, the crooks have the documentation to do with the property as they wish. The ploy generally ends with pulling the equity from the house, withholding all payments on the outstanding mortgage and disappearing before the real owners of the property become aware they have fallen victims to the crime. The real owners are caught completely unaware; they usually find out about the scheme by reading a foreclosure notice on their own home.
The problem of deed fraud is exacerbated because most state statutes require the Register of Deeds to accept real estate transfers if they meet the legal requirements. These requirements are often minimal, requiring nothing more than a signature, notarization and legibility.
No perfect solution has been formulated, but counties across the U.S. are creating task forces and units focusing specifically on the issue. Also locally, cities are beginning to offer free property transaction monitoring services for landowners, allowing concerned residents to identify attempts at fraud. For example, Philadelphia recently implemented the Document Notice Program, which informs property owners by mail about transactions on their deeds or mortgages. Several states—including Florida, Michigan and California—are showing interest in dealing with the problem, but these approaches are still in the early stages of development. The FBI also continues to work with state and local governments on eradicating the problem.