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Title Fraud: What It Is, How It Happens, and How to Protect Yourself

The FBI reported that nearly $400 million from 11,727 victims was lost due to real estate fraud in 2022. Fraudsters try many different ways to scam the system and get your money, including email phishing, wire transfer fraud, identity theft, spoofing, and more.

Most of these scams target those who are in the process of buying or selling a home. Title fraud, however, targets those who already own their home.

What exactly is title fraud and how can you prevent it from happening to you? Let’s take a closer look.

What is Title Fraud?

Home title fraud refers to someone going behind your back and transferring the title to your home into their own name or making financial changes to it. This allows them to steal both money and property – or either of the two.

Title fraud includes identity fraud as a vital part of the scam since it requires the creation of a deed that looks as identical to the original as possible although it is forged. It also involves using the homeowner’s financial records to secure new loans for the property. Without stealing their identity, this wouldn’t be possible.

How Does Title Fraud Happen?

There are several different ways that home title fraud happens. After all, thieves need to use different tactics to achieve the same goal so that they can reduce their risk of getting caught. A few of the most common methods they use to commit title fraud include:

  • Fraudulent Sales. Creating a believable deed in order to fraudulently sell homes or buildings that are not consistently inhabited – or inhabited at all. In other words, short-term rentals, vacation properties, vacant buildings, vacant land, and even rental structures have all been the targets of this scam.

  • Refinance. Applying for a refinance. When approved, it leaves you with a new mortgage you really didn’t apply for — and the thief walks away with your equity. The good news is that you still have your home, but the bad news is that the money you put into it is gone.

  • Line of Credit. Just like a refinance, stealing your identity can allow the thieves to apply for a HELOC and steal your equity, leaving you with a new loan to pay.

Finally, homeowners who are struggling to make their payments are often desperate for a solution to get their heads back above water. Scammers can take advantage of this by pretending to be a legitimate company with a perfect refinance opportunity. Unfortunately, being quick to get everything done, the unsuspecting homeowner signs over the rights to their property to the thieves. Instead of getting more affordable payments, they lose their home.

Protecting Yourself From Title Fraud

If you think that home title fraud sounds scary, you aren’t alone. Those who have become victims of it have some horrific stories to share. Thankfully, there are a few things that you can do to protect yourself - and your home.

Educate Yourself

Simply reading through this article has hopefully opened your eyes to some of the scams out there, making you more leery of situations that may sound too good to be true. But you cannot stop here. Scammers are always trying to stay one step ahead so they don’t get caught, which means that their game plan is always changing.

Continue to educate yourself on common scams.

Monitor Your Credit

Because so much of home title fraud involves identity theft and loans or liens against your property, it is important to monitor your credit regularly. Know what is on your credit report and look for anything that doesn’t belong.

Rather than dismissing or shrugging off any type of suspicious activity, look into it. You never know when it may be a scam.

Stay On Top of Your Mail

Always look at your mail. Anytime you see something that looks different or unfamiliar, take a closer look. Also, if you don’t receive mail that you are used to getting, someone could be tampering with it in an attempt to use your identity for title fraud.

Invest in Title Insurance

Title insurance protects against a lot of things – including fraudulent claims against your property. If someone tries to take your property, your title insurance policy will protect you. Your defense and legal fees will be taken care of so that you may remain in your home.

Still Have Questions About Home Title Fraud?

If you still have questions about home title fraud or protecting yourself, the title experts at Endeavor Title have the answers you are seeking. Contact us today at (410) 666-3780.

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