Home Title Theft: What it is and How to Prevent itSubmitted by JMB Financial Managers on February 11th, 2022
Owning a home or business can be one of the great joys in your life. Not only does property ownership provide you with a secure and stable living situation, but it is also provides crucial assets that are helpful for your financial planning, credit building, and wealth management. However, a little-known challenge for home or property owners can be the threat of home title theft.
While you may not think that home title theft is an event that happens regularly, that is not true. Home title theft has been rising in many US cities. Continue reading to learn more about home title theft and how you can prevent it from happening.
What is Home Title Theft?
Home title theft is known by many names including deed theft, house stealing, house deed theft, and more. It is a type of theft, closely related to identity theft, where a thief puts your home deed in someone else’s name.
Many deeds and home titles are publicly accessible online, usually via a registry. This provides scammers and thieves with the opportunity to download and/or forge your home’s title documents. Unfortunately, a convincing forgery is easy to pass off as legitimate when it comes to property titles. The thief will then either sell the deed to your property in a real estate scam or use it to claim any equity you have invested in your home.
Once the home deed has been transferred out of your name, there are several ways that you, the homeowner, can find out about it. The most common way is when the “new residents” arrive at the residence claiming it's theirs, with the property deed in hand. Title theft can also result in the foreclosure of your home if, for instance, the property has been refinanced by the thief, and the mortgage is not paid.
How is home title theft possible?
A home title theft can happen through several methods, depending on the type of home that is being targeted. Most of the properties that go through home title theft are vacation homes, rental homes or second properties, and unoccupied homes.
- Properties that are not inhabited are at risk because some scammers start by squatting in unused homes, plus forged deeds can be made and the house sold without the knowledge of the real owner, especially if the owner isn’t checking in on that property regularly.
- Once the thief has locked onto their target home, they begin by committing identity theft, often forging documents like a fake ID, Social Security card, or other official identifying documentation. This way they can create a fraudulent “bill of sale” that says they now have legal possession of your home. The deed to your home is then transferred into their name or someone else's name.
- A home equity line of credit (HELOC) can be opened in your name. The thief can then take out available equity from your home. After this, they simply don't make the required payments, which leads to foreclosure on your home.
- They can also refinance your home mortgage, once they have possession of the fraudulent deed, cashing out on the equity and taking the difference with them. They don’t pay the new mortgage on your home, which eventually also leads to foreclosure.
- Homeowners can sometimes be lured into home title theft through refinancing offers, which are actually home sales in disguise. The deed is transferred to the thief, and you are left with no money and no property. Senior citizens are often the targets for this kind of fraudulent offer.
What To Do If You're A Victim of Home Title theft
If you are a victim of home title theft, the first thing to do is call the companies where the fraud occurred. You should then inform your creditors that fraud has occurred, so it doesn't affect your credit rating.
When your property has been transferred under your name by a thief, you should report identity theft to the Federal Trade Commission (FTC). Filing a report at the local police station near your property is also recommended. A stolen title doesn't only affect your property ownership but can end up ruining your credit or putting you in debt. The quicker you act, the more you can minimize the damage.
According to HG.org “When a property sells through an online purchase with a deed that either does not exist or is not legal, it may take time to unravel the matter to discover the culprit and reverse the damage. The new buyer may receive the title, but when sold by someone that has no actual interest in the property, the incident involves fraud and an illegal sale. A state investigator usually becomes involved in these matters. However, it could take time and years to remove confusion and undo these schemes. Stopping the perpetrator is almost as important as reversing the outcome of the sale.”
If you plan to pursue legal action against the thief or to regain the possession of your stolen property, hire an attorney who specializes in real estate fraud cases. Unfortunately, the perpetrators of these thefts often go undiscovered and unpunished. In cases where the thief is caught, the victims can often sue for damages. The legal process of an investigation and reacquiring your home will cost you additional funds aside from the funds lost when your home title was stolen.
Warning Signs To Watch For
Becoming a victim of home deed theft is definitely not something anyone wants. You need to protect yourself from title fraud and keep a lookout for these signs:
- Acquire title insurance. A title insurance company will protect you from any fraudulent claims or liens made against your property. Note: title insurance is not the same thing as home insurance or mortgage insurance, neither of which will help protect you from home title theft.
- Notice any missing bills: If you're used to getting bills of several utilities and services at your residence, you might notice when they suddenly stop arriving. Contact the company immediately when you notice that bills are missing, even if it's just one. If you find extra bills for services or things you've never signed up for, follow up with the concerned company. Missing these bills in the short term might not seem like a big deal until you get a foreclosure notice on your home.
- If you own a second or multiple properties, keep detailed, regular records of all bills and utilities for each additional property. Staying on top of any property or utility bills and invoices will make sure you notice if they stop arriving or are incorrect.
- Observe your credit report: You should regularly be checking your credit score and report to know whether fraudulent charges are being made. If your credit score suddenly drops significantly or your credit card bills show charges that you didn’t make, call your bank or credit card provider immediately to report potential fraud. Monitoring your credit can ensure that you catch any signs of title fraud and take action early.
- In general, you can protect yourself from identity theft and home title theft by taking recommended online security measures. Evaluate your passwords, accounts, and other cyber-protection methods. Avoid opening phishing emails that can infect your device and take sensitive information. Don’t provide any personal or financial information to anyone that you haven’t 100% verified online or over the phone.
Protecting Your Home Against Title Theft
For thorough asset protection, follow specific anti-fraud guidelines that can help better protect your home and other sensitive information. The first, and possibly most important, step to protecting your home from fraud is protecting yourself from identity theft which is almost always a precursor in cases of home title theft.
Question any call, email, or conversation that asks for sensitive information. Most bank and insurance companies have available information on how to spot fraudulent calls or emails and how to know if a phone call or email is legitimately from them. It is generally advisable to look for any suspicious conversations that require personal or financial information.
Verifying your property at your local deed recorder's office regularly is also advisable when you want to ensure that it hasn't been targeted by thieves. You should only work with licensed companies and use strong passwords for all important accounts. Consider getting a reputable professional service that helps you prevent any kind of fraud from happening with your assets.
Choosing a Plan of Action For Your Requirements
Once you know how and when to protect your home from title theft, you can start creating or choosing a plan of action. Generally, utilizing the expertise of your financial planner is ideal at this stage. They can let you know any gaps or vulnerable areas in your current asset protection plan and create a plan with you on how to fortify them.
Home theft is a growing concern in most major cities. Especially with the information that's available over the internet, it is more important than ever to be aware and cautious about what personal details you share online. Your financial experts can help ensure that your property titles are protected, just like all your other assets.
Contact Us For A Complimentary Consultation
As a homeowner or small business owner, there are assets that you need to protect to ensure a stress-free life. When you have many worries already, the last thing you need to be concerned about is theft of your assets. Finding the problems and identifying them early is crucial when you want to avoid theft.
Contact us for a complimentary consultation that can help you know how to move ahead with your financial planning and asset protection plan. A consultation can provide you with the foundational knowledge and the best way forward for protecting and growing your assets.
About the Author
Jack Brkich III, is the president and founder of JMB Financial Managers. A CERTIFIED FINANCIAL PLANNER™, Jack is a trusted advisor and resource for business owners, individuals, and families. His advice about wealth creation and preservation techniques have appeared in publications including The Los Angeles Times, NASDAQ, Investopedia, and The Wall Street Journal. To learn more visit https://www.jmbfinmgrs.com/.