Home title fraud has become a fast-growing cybercrime in the United States, with losses totaling over $350M for real estate-related fraud in 2021 alone (up 64% from the previous year). Fraudsters are taking advantage of the massive amount of data available online to impersonate lenders and buyers to exploit people's hard-won equity or sell the roof from over their heads. Here are the common types of title fraud and how title agents can play a role in its prevention.
Though there are many types of fraud that can make a real estate transaction go south, here are a few examples of title fraud that agents should be aware of.
The first is home title fraud. In this type of fraud, a criminal accesses the title to a home using public records and changes the name from you to them. They then use the deed as collateral to take out loans they don't repay or to sell the house from under the owner. This process can be done relatively easily by anyone with access to the internet and some basic identity theft know-how. The ease of this type of fraud and the difficulty of stopping it makes it particularly dangerous to homeowners.
Title agents should also be aware of payoff fraud, where they may be duped into wiring money from a sale or refinance to the wrong person — bilking the buyer, seller, and title agency of significant funds.
Another type of fraud that targets lenders is also on the rise. In these instances, criminals can create everything from spoof payment portals that mirror the lending company to phone calls that imitate settlements with the seller but redirect funds to the fraudster instead. These copycat tools have become so sophisticated they can fool even seasoned agents and lenders, leading to catastrophic financial losses and title discrepancies.
Like other kinds of fraud, title fraud depends on falsifying identity or illegally modifying documents. For years, the solution to verifying identity was to sign and notarize documents with an in-person notary. The notary was charged with confirming the veracity of the signers and creating a legally binding document — building trust between all parties.
But with the ability to now create near-perfect dupes of identification documents, the notarization process needs more reinforcement than just the verification of a notary. Using an online notarization platform like Notarize provides additional layers of security in addition to the notary's verification of a signer's identity.
Notarize triple-verifies the identity of all parties—first, through a series of personal information questions drawn from public records; second, with a state-issued ID; and third, by direct confirmation from the online notary. This makes it more difficult for people to pretend to be someone they aren't, ultimately deterring fraud. The Notarize platform also stores a data trail of each interaction, complete with recordings of the signing session and the notarized documents, creating an easily-auditable file if something goes awry.
Online interactions are often associated with data leaks or vulnerability. But online notarization can be more secure than the traditional, in-person and paper-based process. Notarize encrypts all data that is stored, and the digital process itself reduces the risk of misplaced or stolen paper documents.
For title agents dealing with assets as necessary as people's homes, having a system that makes it harder to commit fraud—and easier to track red flags—can bring enormous peace of mind.
In a world where digital fraud is rising, fight back with a digital solution that's up to solve the problem.