There are numerous types of mortgage and real estate fraud prevalent in the industry today. Recognizing the Red Flags may help with detection and prevention, and at the very least, encourage further investigation to ensure the validity of the transaction.
POWER OF ATTORNEY
There are valid reasons for a party to use a power of attorney, but documents can be easily fabricated. To limit the potential for fraud, the best case scenario is for the buyers and sellers to appear in person at closing.
SIGNATURE ON DOCUMENTS VARY
Signatures on closing documents should be compared with signatures in the chain of title. A current seller has most likely signed a prior mortgage and these signatures can be compared. Forgers may misspell names or sign them differently leaving off middle initials or designations such as “Sr.” or “Jr.”
PROPERTY IS FREE AND CLEAR
A very small percentage of Americans own their property free and clear. If there was a mortgage on the property that has been paid off over a 30-year period, it would be uncommon for the owners to obligate themselves by taking out a new loan on the property. Asking the question, “Why are there no liens on the property?” and verifying the details of the transaction may uncover the possibility of a forgery in the chain of title.
NO DOCUMENTS EXECUTED IN THE OFFICE
The use of a notary service may be a convenient option for buyers and sellers, but it increases the opportunities for fraud. Deeds, mortgages and other closing documents may be signed, notarized, and returned by mail to your office but the notary signatures, and even their stamps, can be bogus. If buyers and sellers are unable to appear at closing, utilize a reputable notary service to authenticate the identity of parties to the transaction.
BUYER WALKING AWAY WITH MONEY
The best things in life may be free … but free money at closing is a fairly good indicator that the property value may have been inflated. Further scrutiny of loan details may reveal potential loan fraud.
The sales of property by an out-of-state or out-of-country seller are increasingly more common and forgers may find it easier to commit fraud where the property owners are located in another area. Contacting the owners listed on the tax rolls may alert them to a scheme involving their property.
PROCEEDS ARE BEING WIRED OFFSHORE
Once money has been wired out of the country, it becomes almost impossible to recover once a forgery has been discovered. If there are suspicious circumstances that cannot be adequately explained, further investigation is needed before proceeding with the transaction. There are numerous types of mortgage and real estate fraud prevalent in the industry today.
ABOUT MERIDIAN TITLE CORPORATION:
As one of the largest independent title agencies, Meridian Title strives to be the leader in providing real estate related services and products. We partner with our customers and communities in achieving mutual goals of success, growth and profitability. In keeping up with the ever changing and challenging real estate markets, MTC has created highly successful divisions serving residential , commercial, new construction, relocation and REO to name a few. Additionally, through our strong network of underwriters and agents, we have the ability to streamline transactions in 9 states.
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