I was driving the other day when I heard an advertisement for a service called “title lock insurance” where the “host” was talking to a “title thief” about how easy it was to steal your house.
The ad made it sound like it was trivial to forge a deed and file it at the courthouse. As if you just had to scribble a few things down and BOOM, house is yours. Then, get a loan using your new house as collateral and then ride off into the sunset with your ill gotten gains.
Then came the scary part – as the scammed homeowner, you would be on the hook for the money and potentially lose your house. But don’t worry, all that can be avoided with a little service called title lock insurance.
Get this for your home and you’ll be safe!
Fortunately, the host and thief know this service that can help!
I bet you can tell by my deeply veiled sarcasm that this service isn’t high on my list of must haves. 🙂
Table of Contents
What is Title Fraud?
First off, what exactly is title fraud? What is this serious threat that I’d never heard of before this ad?
If you own your home, your name is on the deed. You own the home and the deed is proof (well, and that it was recorded at your county courthouse) that you are the owner of the home. It’s a document that explains how the previous owners sold their home to you along with some useful details about the sale. Deeds are remarkably easy to read.
(You may have a mortgage but that’s a separate arrangement with a bank where you’ve received a loan with the house as collateral – you are still the owner though, but the bank has a claim on the house)
Title fraud is when someone forges your name on a deed (giving ownership to the thief) and files that deed at the county courthouse. Basically, they forge everything they need to get the court to believe that you sold your house to them. (no easy task)
Then, they typically will take out a loan with the house as collateral. That’s how the forgery turns into money in their pocket.
It has quite a few steps.
What is Title Insurance?
You may remember title insurance from when you bought your home.
Title insurance is something you pay for when you buy a home and has nothing to do with title lock insurance. Title insurance covers you in case there was something wrong with the title prior to you purchasing the home.
Typically, this has to do with liens or other “encumbrances” (they call them “defects”) on the title that were there before you purchased the home. They research the history and insure it’s clean. If it isn’t, then they pay up.
It’s important to know that title lock insurance is NOT title insurance.
Is Title Fraud Common?
My sense is that this type of scam is rare. In fact, until this “scary” radio ad, I’d never heard of it. I think it’s rare because it’s extremely difficult to pull off and you need a lot of domain expertise.
You have to get the deed, forge the owner’s signature, record the deed with the county courthouse THEN get a loan from the bank. There are so many checks and reviews in the system that it’s likely something will trip up the scam.
Let’s say something does go through all the way and the thief gets the money. You are not on the hook for any of it because you:
- Are not the borrower
- Bank has no claim on the house because you are the rightful owner, not the thief
Title Fraud Still Happens Though
I first published this article in mid-2022 and received an email from a reader that this happened to her!
Unfortunately my husband and I had our home title fraudulently transferred to an unknown company via our local county recorder without our knowledge earlier this year.
We have owned our home since 2001 and already have a legitimate deed from that time.
We have always had a mortgage and no one questioned our homeownership until a group of individuals in January this year conspired to acquire the title to our house by creating their own fraudulent deed and presenting it to our lender, which is a local credit union.
You would think our lender would back us up as being the true legitimate homeowners because we did sign a deed with them 5 years ago when we did a refi, but they chose to be impartial and attempt to remove themselves from liability, even though I immediately informed them in February when I found out about the fraud deed that we did not initiate or request any kind of title transfer and that our signatures were forged.
Anyway, we have reported the deed fraud to the Arizona Attorney General.
So yes it does happen.
I find it weird that the credit union didn’t get involved, they should have a lien on the house because of the mortgage.
It should not be that difficult for a legitimate homeowner to prove homeownership.
It should however be MORE difficult for people to submit fraud deeds. Such as, the local county recorder should verify whether there was a real estate sales transaction or not to accompany the deed.
In our case, our house has not been sold since we bought it in 2001, yet the local county refuses to hold any accountability for having accepted a fraud deed.
“We just file them if someone pays the fee” is what they told me.
Perhaps if the county recorder or property tax assessor had actually did due diligence research on our house, they would have seen we have been the homeowners since 2001, and perhaps upon verifying this, they should have attempted to contact us first to alert us that someone had attempted to file a new deed.
It is sad that none of the people I talked to in our local county had answers for me regarding why THEY didn’t have checks and balances within their own organizations. They just pawned it off as being the domain of lawyers to determine if a document is fraudulent or not.
I have learned that Arizona is still a “wild west” anything goes mentality. Sure there are some credible people and companies, but in the past couple years it has become apparent to me that Arizona has lousy laws regarding protecting homeowners.
On paper it would seem that this type of fraud would be extremely difficult… but it turns out that some places just file anything and everything. In that type of situation, there isn’t much a homeowner can do.
At the time of this update (end of 2022), the AZ attorney general is on the case and trying to catch the criminals because they’ve been doing it to a lot of other homeowners.
What is Title Lock Insurance?
In most cases, it’s not actually insurance. It’s like a monitoring service that checks court records for changes to your deed. I suppose in that regard it has some use but usually not worth the monthly fee.
Also, you can’t lock your deed like you can lock / freeze your credit reports.
So… title lock insurance is neither a lock or an insurance. It’s just monitoring and unlike identity theft services, they won’t do anything to help you fix the matter if you do run into problems.
There are some services that expand on simple title lock insurance, like LifeLock Home Title Protect. It offers monitoring as well as some support for identity restoration. LifeLock charges $99.99 a year (or $9.99 per month) for this service.
Is Title Lock Insurance Worth It?
While technically anyone can forge a deed and try to file it at the courthouse, it seems quite risky. They run the risk of getting caught, being charged with forgery, and going to jail. After they successfully get the deed changed, they have to get a loan too.
I have to believe that if you have a mortgage, your bank is going to have something to say about the deed being changed. 🙂
All this is to say that this type of scam seems extremely rare and it’s not something you really need a monitoring service for.
If you want to monitor your deed, you can always do it yourself. Just google your state or county and “land records.” In Maryland, all land records are publicly listed at mdlandrec.net.
You can also look out for warning signs like getting mail for other people but for your address – or you’re missing mail you expect to receive like bills. And it’s always good to keep an eye on your credit reports.
Finally, if something does happen, you’re never on the hook. It can be a pain to resolve but in most cases, title lock insurance wouldn’t have helped you anyway.