Home Title Fraud – What Is It and How To Prevent Theft?
Most of us are familiar with credit card fraud and banking fraud. We may even take steps to avoid things like tax fraud. However, another type of fraud that you need to understand if you are a property owner is home title fraud.
Home title theft is part of the wide-ranging world of scams that cost American consumers nearly $8.8 billion in losses in 2022, according to the Federal Trade Commission.
Protecting yourself against home title theft requires spending a bit of time guarding your personal data. You also need to be able to recognize the different types of techniques thieves use when your home’s title is in the crosshairs.
We’ll explain everything you need to know about home title scams. Most importantly, we’ll provide some tips to help you avoid them too.
What Is Home Title Fraud?
A home title fraud involves someone using fake documentation, impersonating you, or impersonating a local official, all in an effort to take control of your home’s deed. The deed to a home is a legal document that shows the transfer of ownership of property from one entity to another.
The chances of becoming a victim of a home title fraud incident go up significantly if you are also in the midst of suffering theft of your personal identity. Although having a criminal steal your personal identifying information doesn’t always result in home title fraud, the possibility exists.
The Identity Theft Resource Center reports that 422 million data exposures occurred in 2022 in the United States through 1,800-plus compromising events. (Some Americans suffered multiple data exposures.) Of those events, 565 of them exposed people’s current home addresses, which could lead to a case of home title fraud.
Common Home Title Fraud
- Impersonating your bank
- Selling your home behind your back
- Loss of the home’s equity
- Using property taxes to steal a home
As we’ll explain next, not all home title scams involve the criminal taking control of your property without your knowledge or permission. With home title details in the hands of criminals, you could become a victim of several different types of crimes involving fraud.
1. Impersonating your bank
What is it? If scammers access some of your personal information and learn that you are having financial problems involving your home, they could generate a scam that leads to the loss of your property. They may trick you into signing a document that transfers ownership of the property, for example.
How to spot it: Perhaps the criminal contacts you, posing as an official from your bank or from a creditor. The scammer may offer to help you financially by suspending your mortgage payments or by reducing them. The scammer then tries to convince you to sign loan papers or credit cards to put the new terms into effect. Instead, the document that you signed gives the scammer control of the property.
How to avoid it: If someone claiming to represent your lending institution calls you out of the blue with this type of offer, be suspicious. Reach out to your bank yourself. You then can ask questions to help you determine if the offer is real. Don’t use any contact information the potential scammer gave you, as these phone numbers likely lead to the scammer.
2. Selling your home behind your back
What is it? After stealing enough information about you and your home, a criminal may be able to create fraudulent documents about the property. The scammer then may “sell” the homes to another party in a transaction that appears to be real to the buyer. This type of fraud is more common for properties that you don’t occupy regularly. Perhaps you own a vacation home or a business property that is currently vacant.
How to spot it: If the scammer learns that you as the owner rarely visit the property, the scammer could set up tours of the property. Such tours can make the fake sale of the property seem real to the buyer. Odd activity around the property could be a clue about this type of fraud.
How to avoid it: Even though it’s unlikely you would lose ownership of your property under this type of fraud, you want to avoid it. You potentially could find yourself the defendant in a lawsuit with the entity that purchased the property, for example. Having someone check on the property occasionally for you or using remote cameras to make sure no odd activity is occurring is a way to combat this type of fraud.
3. Loss of the home’s equity
What is it? If you have a mortgage on your home, it’ll be difficult for a scammer to take outright ownership of the house. The lending institution that holds the lien will maintain at least some ownership. However, a criminal who steals your personal information potentially could “borrow” against any equity you have in the home by posing as you.
How to spot it: With some of your personal information and information about your property, the scammer could try to open a home equity line of credit (HELOC). The criminal then steals this money. Because the lending institution thinks you borrowed on the HELOC, it says you are on the hook for repaying it. If you see bills for odd loans or if you see inquiries on your credit report that make no sense, this is a potential sign of this type of scam.
How to avoid it: Consider freezing your credit report during times when you do not need to open new loans. With a freeze in place, the credit bureaus will not allow anyone to make an inquiry about your credit. This should cause financial institutions to deny any requests for a HELOC or similar type of loan.
4. Using property taxes to steal a home
What is it? In some states, if you miss a property tax payment on your home, this amount becomes a lien on the property. If someone learns about this tax debt and pays it, some states’ laws allow the entity that paid the tax to take ownership of the home. This isn’t a criminal type of fraud because it is legal in some states. Many states are passing new laws that prevent this action, though.
How to spot it: Keep a close eye on your property tax bills. Most local governments allow you to check your tax balance online. Watch your credit report, too. If the government placed a lien on your property because of unpaid taxes, this should show up on your credit report.
How to avoid it: If you believe you did not receive a notice in the mail about your property tax bill that is due, check with your local assessor’s office about any tax balance.
Remember that if you do not hold a mortgage loan on your property, you must pay your property taxes yourself. With a mortgage on the property, the lending institution usually will collect money for the taxes from you as part of your monthly payment, paying the government for you.
What Are Signs of Home Title Theft and Scam?
One of the scariest things about a home title scam is that the signs of a potential problem aren’t always obvious.
Some of the simple signs that a home title scam may be occurring include the following:
1. Lost mail
One of the simplest ways a criminal may try to steal your identity and gain access to your home title is by actually taking mail out of your mailbox. Even though this mail may seem like harmless bills and notices to you, a scammer can find a wealth of information about you in these documents.
You may not give it a second thought if your mortgage bill doesn’t show up one month, because you pay it automatically through your bank account. Unfortunately, the scammer may only need a few pieces of mail like this to cause significant problems for you, including home title fraud.
2. An incorrect name on your mail
If you suddenly begin receiving mail with your home address on it but with a person’s name you don’t recognize, this could be a sign of fraud.
Someone else may have committed home title fraud against you. The criminal may have opened accounts against your property under a fake name, leaving you receiving the bills.
Contact the company that issued the bills with the odd name on them, immediately. The sooner you spot this type of issue, the better chance you have at fixing it before the damage becomes overwhelming.
3. Credit score dip
When a scammer gains access to your home title, you may notice this issue first through a sudden credit score drop.
If the scammer attempts to open several new lines of credit or loans based on the information found with your home title, your credit score may suffer. Such loan requests often lead to a hard inquiry against your credit, negatively affecting your credit score.
If you suspect this is happening, check your credit report. If you notice multiple inquiries listed on it, you may want to freeze your credit report, which prevents anyone from making hard inquiries against your credit.
4. Catching fraud early
The best way to avoid suffering a significant loss from a home title scam is to catch the signs as early as possible. You then can take steps to protect your property deed and your personal information to remove the possibility of fraud or to minimize its impact.
Helping you catch problems early is one of the most important features that an identity theft protection service provides.
Even if you don’t see the signs of fraud, an identity theft protection service such as Aura can potentially catch them for you, because the service is constantly monitoring your information. The theft protection service is always on alert.
How to Prevent Home Title Theft?
Of course, the best option is to avoid becoming the victim of a home title theft in the first place. You can take a few steps to reduce the chance of having a criminal commit fraud with the title to your home.
1. Keep good records
As we mentioned earlier, catching the signs of fraud as early as possible gives you the best chance at avoiding significant consequences.
Put a system in place that helps you monitor things related to your home ownership. Make sure you’re receiving your bills on time, especially the mortgage. If a bill is late or doesn’t show up, reach out to the issuer immediately.
2. Switch to digital billing
If you have concerns about someone stealing your pieces of mail out of your mailbox, switch as many of your bills to digital delivery as possible. Then, of course, take steps to protect your email account from hackers.
3. Lock your credit reports
Scammers and thieves cannot open new loans in your name when you lock your credit report. (Of course, you can’t open new loans, either, until you unlock the credit.)
Because so many instances of home title fraud involve the scammer opening loans in your name, this step can give you an extra layer of protection.
4. Check your credit reports
Signs of impending fraud involving your home title could show up as an unusual bit of information on your credit report. You can view credit reports for free, or you can subscribe to an identity theft protection service such as Aura, and receive help with monitoring your credit reports.
5. Check your public records
You always have the right to look at any information that the local government tracks about your home or property. If a new lien holder on your property is a surprise to you, it may indicate fraud.
You often can check this information online. If not or if your local government is slow about updating its online records, visit your local government offices occasionally to check the records in person.
6. Use your intuition
If you suddenly receive an offer about improving your mortgage rate or lowering your monthly mortgage bill, don’t blindly click a random email or text message link. Do your homework to see if the offer is legitimate before making any decision.
Look up information about the company behind the offer and check its reputation. You may find that if the offer seems too good to be true, it probably is.
What You Should Do If You’re a Victim of a Home Title Fraud?
If you believe you are a victim of home title fraud, you need to take a few steps to try to protect yourself as quickly as possible. (If you subscribe to an identity theft protection service, this service often can help with these steps after you report the fraud.)
1. Contact any lenders for your home or property
Start by contacting any financial institutions that may hold a lien on the property. These entities then can take steps to block any party from making transactions related to your mortgage or other accounts.
2. Contact credit bureaus
If you believe you are the victim of home title fraud, reach out to the credit bureaus (TransUnion, Equifax, and Experian).
Explain what you believe is happening, and the bureaus can place a note in your credit file. The bureaus can help with freezing your credit as well.
3. Contact law enforcement
Contact local law enforcement authorities to report the fraud, so an official record is available for any potential insurance claim. Your bank may also need a copy of the police report to help you regain control of the property.
Depending on the circumstances surrounding the fraud, your local law enforcement may recommend that you contact state or federal law enforcement officials, or relevant companies.
4. Contact your local officials
Reach out to your local assessor’s office or register of deeds office to alert those officials to the potential fraud. They may be able to include a notice on your property deed that alerts local officials to watch for transactions that could indicate fraud.
5. Contact an attorney
Consider contacting an attorney for advice on how to proceed. If you eventually need to file any legal documents to protect your identity and your home title, having an attorney already up to speed on your case will help.
Unfortunately, if you suffer home title fraud and theft of your personal identity, you could incur significant legal fees in an effort to set things right again. If you subscribe to an identity theft protection service, you might receive some help with these costs.
6. Consider subscribing to an identity theft protection service
If you want some help in monitoring your personal information, including your home title, for potential signs of a scam, consider subscribing to one of the best identity theft protection services.
Many identity theft protection companies offer monitoring of your home title as part of the base subscription. If something strange seems to be happening with your property title, the identity theft protection service will notify you.
With this heads-up, you then can investigate further. If needed, you can take steps to protect your home title from potential fraud.
Sometimes, receiving notice of an oddity with your home title information alerts you to a wider case of fraud involving your personal information. An identity theft protection service can help you here.
Vigilance Helps You Avoid Home Title Scams
Credit: Tierra Mallorca
Because of the equity you have built in your home, becoming a victim of home title fraud significantly threatens your financial well-being. It’s also a scary time emotionally, as you expect your home to be your safe space.
Closely watching for signs of potential home title fraud gives you peace of mind that one of your most valuable assets is as safe as possible from criminal scammers. Subscribing to an identity theft protection service can help you monitor your property title information efficiently.
Here are some articles about scams that you should be aware of:
