This article originally appeared in the January 2025 edition of MortgagePoint magazine, online now.
Title fraud, though not new, recently gained national attention when a Missouri woman attempted to fraudulently auction Elvis Presley’s Graceland estate. She falsely claimed the property was collateral for an unpaid loan, using fake loan documents and a fabricated foreclosure notice in a Memphis newspaper. The scheme unraveled when it was discovered the loan documents contained falsified notarizations, leading a judge to halt the sale.
This incident raises an important question: if Graceland can be targeted, is any property truly safe? Likely not. Title fraud is becoming more widespread, with perpetrators growing increasingly bold. Fortunately, there are ways to detect deed fraud attempts early, but mortgage professionals need to be well-informed to protect themselves and their clients.
How It Works
Property transfer fraud, also known as deed fraud or title fraud, involves the illegal manipulation of property ownership documents to unlawfully transfer a property’s title from the legitimate owner to another party without the real owner’s consent. It’s perpetrated through various methods, including forging signatures on deed documents, creating fake deeds, or using stolen personal information to impersonate the actual property owner.
In some cases, AI and other digital tools have also been used to create convincing forgeries of documents or to automate the process of generating fake deeds and other legal documents. Additionally, the widespread availability of an individual’s personal information through online databases has made it easier for fraudsters to impersonate property owners or fabricate convincing histories.
The targets of these crimes are often properties that are free of loans and owned by absentee owners or others who may not closely monitor their property records. Once they gain control of the title, fraudsters will try selling the property to unsuspecting buyers, securing loans against it, or renting it out to someone. The legitimate owner is often completely unaware of the fraud until they face an eviction notice or discover liens taken against their properties, at which point they face a significant legal battle to reclaim their rights.
There aren’t precise statistics on how common title fraud is, but there are many signs it’s growing. In 2024, the American Land Title Association (ALTA) highlighted the persistent challenge of seller impersonation fraud (SIF) within the real estate industry. According to a survey of 783 title insurance entities nationwide conducted by ALTA and NDP Analytics, 28% of title insurance companies reported at least one SIF attempt in 2023, and 19% reported an attemDax Junkerpt during the month of April 2024 alone.
Fortunately, most SIF cases are identified and addressed before closing. But there have been cases that weren’t caught. For example, in one recent incident, a fraud ring used forged quitclaim deeds to illegally transfer properties to fictitious entities that were then sold off, leaving the true owners entangled in complex legal battles to reclaim ownership.
While digital tools have made deed fraud easier to perpetrate, so have procedural vulnerabilities within most real estate transactions. Too often, the processes lenders and title companies use for verifying and recording deeds don’t include stringent identity checks, which can enable forged documents to pass through undetected. Once a fake deed is entered into the public record, it gains a veneer of legitimacy that becomes more difficult to challenge. For example, in the case involving Graceland, the scheme was unveiled only after a vigilant legal challenge by the estate’s trustees.
How to Stop It
The increasing frequency and sophistication of title fraud indicates that the integrity of the nation’s property records remains under constant threat. That’s why it’s so important for lenders, title providers, and consumers to stay informed about the risks and undertake preventive measures to keep properties from being virtually stolen under their noses.
While it may seem obvious, every lender and title provider should be enhancing due diligence throughout their operations, particularly in processes involving title. For every transaction, there should be rigorous checks that include verifying the true identities of all parties, a thorough examination of the property’s history, and cross-referencing all provided documents with public and private databases. Training staff to recognize the signs of fraud and the types of techniques used by fraudsters is equally vital.
For consumers, understanding the role that title insurance plays in safeguarding their homes is also critical. While most homeowners are aware that title insurance protects them from financial loss due to title defects, not many realize how it also protects them from fraud. Utilizing a title monitoring service that alerts property owners to any changes in title status can be a helpful strategy, as it acts as sort of an early warning system for any suspicious activity.
Protecting the personal information of homeowners is also essential. For consumers, this means securing online accounts with strong, unique passwords, safeguarding home Wi-Fi networks, and being cautious about sharing personal details. This helps prevent identity theft, which often precedes property transfer fraud. For the broader industry, using secure communication channels for sharing and signing documents and encouraging the use of encrypted platforms that protect sensitive information can help prevent not just title fraud but data breaches as well.
The Power of Partnership
While awareness, education, and enhanced security measures can help defend against title fraud, a lender’s choice in title providers can be a huge difference maker. The question is how to know you have the right title partners in place.
For starters, a competent title partner should have demonstrated expertise in conducting deep, meticulous research into title issues. This entails delving deep into the history of a property to unearth any irregularities or historical discrepancies that aren’t immediately apparent to the untrained eye, such as inconsistencies in the description of a property, anomalies in its ownership history, or unusual changes in recorded documents.
Local market expertise is another indispensable quality. Real estate markets are inherently local, and fraud trends often vary significantly from one market to another. In most cases, a title provider with a deep understanding of local regulations and common practices in the areas in which it operates is far better equipped to spot title fraud than a provider that doesn’t have actual boots on the ground.
A title provider’s use of advanced technology and the practice of continuously updating its tools and methodologies to stay ahead of fraud trends is equally valuable. This may involve investing in advanced data analytics to detect unusual patterns in property transactions and developing or adopting new software and digital tools that enhance borrower and document verification processes.
The importance of choosing a title partner that emphasizes communication and transparency cannot be overstated, either. A title provider that communicates clearly, consistently, and efficiently throughout the entire transaction ensures that all stakeholders, including borrowers, remain in the loop and can make informed decisions quickly. This also enables potential title issues to be addressed promptly, which reduces the chances of fraud slipping through the cracks.
Lastly, the commitment of a title firm to customer service is a good sign that it values its partner and borrower relationships and will go the extra mile to confirm all aspects of the title and closing process are handled with the utmost care and diligence. Delivering an excellent experience also builds a foundation of trust, which becomes critical when navigating seller impersonation fraud and other scams involving title.
While it should be clear that combating property transfer fraud requires proactive measures, continuous vigilance, and robust collaboration, the rise in these scams also calls for a renewed commitment by the real estate industry to ensure a secure, healthy housing market. After all, while it may be impossible to completely eradicate title fraud, it is completely possible to give each transaction the scrutiny it deserves.
