With more and more communication and transactions taking place online, cybercrime is a growing issue for title agencies and homeowners alike. As a title agent, understanding how criminals steal property titles can help protect your clients from fraud and uphold your business reputation. As a homeowner, understanding how criminals target homeowners can help you avoid scams and protect your real estate investments.
Real estate is often the largest asset in one’s financial portfolio, so safeguarding ownership rights is vital in protecting long-term financial health. The impact of home title theft can be devastating for a property owner, so it’s important to understand how and when theft occurs as a way to prevent it.
What is home title theft?
Home title theft occurs when the title to a property is obtained illegally without an owner’s consent. Title theft, also known as deed theft, deed fraud, or house stealing, often happens through identity theft. During this process, criminals transfer a property’s title to another party without the owner’s knowledge or approval.
Title theft increasingly occurs through cybercrime. Certain stages of property sales, purchases, and refinances can provide opportunities for theft because they involve the transfer of funds and sensitive information between multiple parties. Phishing emails, also known as business email compromise/email account compromise (BEC/EAC), are a common way for criminals to acquire the information needed to execute title fraud. In this form of real estate cybercrime, criminals hack into email accounts, assume the identity of a real estate professional or third party, and send false instructions. Within seconds, a property title can be transferred to criminals.
How is a property title stolen?
Theft often happens at critical parts of sales and refinance transactions, which provide opportunities for criminals to transfer ownership to a different party. Here are some common ways that home title theft occurs:
- Mortgage Refinance Theft: A criminal assumes the identity of the owner, refinances a homeowner’s mortgage without their knowledge, cashes out the equity on the property, and then steals the difference.
- Fraudulent Refinancing: In another mortgage scenario, criminals may sell a home under the guise of a refinance. Instead of refinancing the home, the deal is documented as a sale, and ownership is transferred to the thief.
- Unoccupied Residences: In this title theft case, a thief targets an empty home, such as an unoccupied rental property or vacation home. The thief acquires the property title by forging a deed and selling the property without the homeowner’s knowledge.
- Fraudulent Home Equity Line of Credit (HELOC): A thief opens a HELOC in a homeowner’s name, steals the equity on the home, and does not make any additional payments.
- Financial Abuse or Exploitation: Unfortunately, title theft perpetrators are not only anonymous criminals on the internet. An owner’s family, friends, or caretakers may take advantage of opportunities to steal a property title, especially if the owner has been declared legally incompetent. According to The MetLife Study of Elder Financial Abuse, 34% of elder exploitation perpetrators are family, friends, and neighbors.
What to do if a home title is stolen
Victims of home title theft can lose claim to their property and suffer great financial loss. It’s a very helpless feeling, but there are some best practices to take to report the theft. The Federal Trade Commission (FTC) has created a standard process to help consumers to report theft:
- Call the companies where the fraud occurred.
- Place a fraud alert and get individual credit reports.
- Report identity theft to the FTC.
- If applicable, file a report with the local police department.
After an identity theft report is submitted, the FTC provides additional recommendations to help repair damage associated with home title theft:
- Close new accounts opened in the homeowner’s name.
- Remove bogus charges from all accounts.
- Correct impacted credit reports.
- Consider adding an extended fraud alert or credit freeze.
- Review credit reports often.
Preventing title fraud and theft
Preventing home title theft involves a series of safeguards to protect the identity and information of property owners. As a real estate professional, keeping your clients’ information safe is key to preventing theft. Homebuyer education is essential in preventing title fraud, but it’s not enough to prevent it entirely. Technology that allows for secure information exchange and communication is another key piece in fighting title theft. Businesses must invest in secure technology to protect their clients’ data and information. Here are some best practices for preventing title fraud and theft:
- Make sure your client has title insurance on their property: Title insurance protects against claims or liens made on a property. During the closing process, a title company ensures that the title of the property is clear and identifies any issues with the property’s ownership before issuing the title insurance.
- Encourage your clients to check their credit score: Significant changes in credit score may be an indicator of fraud. Missing payments and fraudulent charges can impact credit scores, so monitoring it closely can catch signs of fraud.
- Warn clients about missing bills: If a client’s bills randomly change or go missing, identity theft could be to blame. Encourage clients to contact the company immediately if they notice missing bills or an automatic withdrawal failing to occur.
- Implement internal security measures: Ridged cybersecurity measures can help protect your business and your clients’ information from ransomware attacks. Training your staff and having clear processes in place can help prevent a security breach. Use our daily security checklist to help prevent wire fraud.
Creating a security strategy is an essential step in protecting your business from inevitable cyberattacks. An ironclad security strategy starts with your core technology and workflow software. The Qualia platform is ISO 27001, and SOC-2 certified and was built with the goal of helping Qualia users stay fully ALTA Best Practices Pillar 3 compliant. Learn more about Qualia’s security and privacy policies.