You may have seen or heard ads about title services to prevent losses in the event of what is called title fraud. While fraud in any form remains a threat to consumers, title fraud currently makes up a small fraction of cases involving any sort of real estate scam.
While we are on the subject, let’s discuss titles a little more and how title fraud may occur.
Title vs. Deed
First, let’s define the differences between a title and a deed. We’ll explain the importance of a deed when it comes to title fraud in a moment.
A title denotes who has legal ownership of a home. In real estate, there are different types of titles that may be executed depending on your circumstance.
The deed is a physical (and legal) document that transfers the title to a new owner when a home is purchased. The information on this document includes a detailed description of the property and is signed by you and the seller.
Home Title Fraud
Title fraud occurs when there is an involuntary transfer of your property ownership without your consent or knowledge usually through identity theft. The scammer will change ownership of your home to another name by forging your name on a deed, filing it with the county, and then will attempt to take out a loan using your home as collateral.
Sounds scary, but if you have a mortgage on a home, your lender is typically listed on the deed, and they will be notified if someone tries to retitle the property. If this occurs, your Loan Originator or someone from your lender will then contact you. In addition, most states require multiple signed documents and identification to execute a title transfer. And most of these documents must be notarized.
When title fraud occurs, it is usually because the property is vacant, or the home has been paid off (often the case with older homeowners). But again, even in those cases, there are many steps that must be taken to legally transfer a title to a home.
What About Title Insurance?
Don’t confuse title insurance with what you may be seeing or hearing in advertisements. Title insurance during the purchase of a home protects you and your lender from third-party claims on the property. You typically will pay for the insurance as part of your closing costs. What is being advertised are services to monitor your title or any fraudulent activity. Whether you choose to purchase these services is strictly up to you.
How to Protect Yourself
If you are concerned about title fraud, there are steps you can take to protect yourself.
- Regularly check your credit report for fraudulent activity.
- Never click on links in emails asking for your personal information.
- Pay attention to incoming bills such as your property tax bill, mortgage, etc. If you don’t receive an expected statement, contact your lender or municipality.
Regularly verify your deed to confirm your home remains registered to you. You can do this with a public record search through your municipality.
Equal Housing Opportunity. Axia Home Loans is a registered tradename of Axia Financial, LLC. NMLS 27830.