Tag: fraud

Fraud Protection

The rapid growth of technology in the real estate industry has brought opportunity as well as a whole new set of challenges. Potential home buyers have the ability to search for homes from their fingertips while home-related fraud has become more prevalent. It’s important to protect yourself against fraud by becoming educated on the most common types of threats.

Title Fraud
What is It:
Any forgery or fraud act that involves the home title. There are many types of title fraud, including, but not limited to, forgery committed by the seller or someone who steals the identity of the current homeowner.

Preventative Steps:
One of the easiest ways to prevent title fraud is to purchase title insurance. This type of insurance eliminates the risk of being held accountable for any type of fraud that happened before you owned the property. Additionally, title insurance protects against other potential issues such as clerical errors or incorrect information. Any errors or misinformation on the property title will be handled by the title company where the insurance was purchased.

Wire Fraud
What is It:
Wire fraud is any scheme utilizing false pretenses to obtain money or property via wire transfer or communication. This type of fraud is particularly harmful in the real estate industry because property is such a large investment. The most common type of wire fraud in the home-buying process is a fraudulent request for a deposit on the home.

Preventative Steps:
Once you’re nearing the end of the homebuying process, there are many legal documents and steps involving your personal identity. It’s critical that you protect any personal and financial information while finishing the closing process. Your information is particularly vulnerable through email or other forms of electronic communication.

Here are a few helpful steps to prevent against wire fraud:

  • Never send out any personal financial information via email.
  • Do not click on any links or attachments in unfamiliar email addresses or emails that are unexpected.
  • Clean out your email regularly so that hackers cannot detect any patterns.
  • Change your usernames and passwords on a regular basis.
  • Install and update antivirus and firewall programs on your computer.
  • Report any fraudulent activity to the FBI via the Internet Crime Complaint Center.
  • Ask your title representative, mortgage lender, and real estate broker their typical means of communication. If you receive anything from an unusual method of communication, confirm that it was sent from your real estate professional.
  • Don’t share detailed information about your home purchase on social media.

The Bottom Line: No matter where you are buying a home, be sure to do plenty of research on the home-buying process so that you are able to spot suspicious activity. If you ever notice any potential threats, speak directly to your real estate professionals to confirm the security of your transaction. The best way to protect yourself against fraudulent real estate activity is to remain cautious and informed.

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3 Types of Real Estate Fraud

Buying, selling, and owning real estate is often the most expensive transaction many individuals will undertake in their lives. Hundreds of thousands of dollars are involved and dishonest tricksters and scammers are out there hoping to take advantage of those involved.

Con artists may use several methods to swindle you in one of their schemes. Foreclosure bailouts, home equity fraud, home renovation scams, rental fraud, and deceptive timeshare scams, are just a few types of real estate fraud that may be performed. Here are three of the most common:

Foreclosure Bailout

A foreclosure rescue scheme is a type of fraud that takes advantage of homeowners who have fallen behind on their mortgage payments.  The fraud perpetrator approaches the homeowner with promises of paying off the delinquent mortgage and helping the homeowner stay in the property. 

There are many variations of a foreclosure rescue scheme.  Some schemes require the homeowner to unknowingly transfer the property title to a third party.  Other schemes will promise homeowners that if they transfer the title, they can continue to rent the home and repurchase it at a future date.  The purchaser of the property, sometimes the foreclosure rescue artist, is now free to refinance the property or to sell the property to another party.  Sometimes the foreclosure “rescuer” charges the borrower high ‘service fees’ up front and then disappears with the money without providing the promised service. 

Home Equity and Home Renovation Fraud

According to the Council of Better Business Bureaus, home-remodeling contractors ranked slightly behind car salespersons and auto mechanics in generating the most consumer complaints. Be very careful when using your home or your home equity as security for a home improvement loan. Fast-talking salespeople will offer to refinance your home at a lower interest rate to provide cash to the homeowner, the cash can be used to pay for home improvements or to pay off bills. Victims are frequently asked to sign blank contracts or contracts that they were not allowed to read before signing. Later, the homeowner discovers that they signed a contract that contains terms in contrast to the originally promised terms. This results in the loss of equity in the victim’s home, and also they have signed a mortgage in which they have incurred considerably higher interest rates. The homeowner is now faced with a higher mortgage payment, one that they may not be able to afford.

Rental Fraud

Rental scams occur when the victim has a rental property advertised and is contacted by an interested party. Once the rental price is agreed upon, the scammer forwards a check for the deposit on the rental property to the victim. The check is to cover housing expenses and is, either written in excess of the amount required, with the scammer asking for the remainder to be remitted back, or the check is written for the correct amount, but the scammer backs out of the rental agreement and asks for a refund. Since the banks do not usually place a hold on the funds, the victim has immediate access to them and believes the check has cleared. In the end, the check is found to be counterfeit and the victim is held responsible by the bank for all losses.

Another type of scam involves real estate that is advertised online. The scammer duplicates postings from legitimate real estate websites and reposts these ads, after altering them. Often, the scammers use the broker’s real name to create a fake e-mail, which gives the fraud more legitimacy. When the victim sends an e-mail through the classified advertisement website inquiring about the home, they receive a response from someone claiming to be the owner. The “owner” claims they’re unable to show the property without payment because they are either out of town or out of the country. If the victim is interested in renting the home, they are asked to send money and shortly thereafter the property is no longer available.

The Bottom Line: Be suspicious of unsolicited email or telephone offers. Scammers often find victims through these spam emails. They may send tens of thousands of those emails, hoping to find a handful of individuals who will respond. With advanced technology and interacting digitally with victims, it can be challenging to avoid real estate scams. However, it’s important to stay vigilant about protecting your personal information and bank accounts. Only work with qualified professionals you trust and familiarize yourself with some of the common warning signs. If you believe you’ve been involved in a real estate scam, make sure to contact the authorities immediately.

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Short Sale and Title Insurance

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The reasons for getting title insurance are not obvious at first. One thing we stress at Title First is the importance of owner’s title insurance policies for real estate transactions. When buying a home, a foreclosed property or a short sale, an owner’s title policy is necessary.

Title insurance helps to safeguard that there are not any legal claims out there against the home you want to buy in a short sale. Usually, the owner can’t afford mortgage payments anymore, so the risk is that there are also liens for other debts such as overdue taxes, unpaid contractors’ bills, etc. More often than not, short sales include unsatisfied obligations and if you are to close on the home with these unsettled claims, you would be held responsible for the outstanding debt. require the title insurer to deal with the seller and lien holders on your behalf;

When you have Title First helping, we can require the seller to take care of the outstanding problems prior to the closing, deal with the lien holders directly, and even ask the seller to lower the price of the house. Without a title policy, you may end up with multiple problems.

What Title First will look for is not only unsettled claims but also for fraud, forgery, clerical errors, omissions, encroachment issues, restrictions, judgments, divorce decrees, missing heirs and other problems that are sometimes impossible to anticipate. Having an owner’s policy ensures that Title First will stand behind you, should a problem occur down the road.

Dedicated to innovation and passionate about service, Title First Agency is your comprehensive, nationwide resource for title and real estate settlement services.

To better serve its customers, Title First has implemented best practices and third-party audits, equipping itself to facilitate compliance efforts. In 2014, Title First instituted ALTA Best Practices and continually reviews its compliance. More importantly, in 2015, Title First completed its examination in conformity with Statement on Standards for Attestation Engagements (SSAE) No. 16 through an independent third-party auditor. Each year, Title First continues its SSAE examination, and in 2017 earned the SSAE-18 certification. Title First is one of the few title agencies in the industry having an SSAE-18 certification.

In fact, Title First is one of only two title companies in the state of Ohio to earn the SSAE certification. This certification provides reassurance that Title First Agency is in compliance when it comes to financial controls and internal procedures for data security, availability, processing integrity and privacy.

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