The title industry is working to tackle fraud

By BrokerOwner.net August 30, 2024 Housing News

The
Merriam-Webster
dictionary
defines
fraud
as
the
“intentional
perversion
of
truth
in
order
to
induce
another
to
part
with
something
of
value
or
to
surrender
a
legal
right,”
and
from
identity
theft
to
sweepstakes
and
investment
scams,
it
can
take
countless
forms
at
a
high
cost
to
consumers.
The

Federal
Trade
Commission
(FTC)

reported
that
American
consumers
lost
$10
billion
to
fraud
in
2023,
a
14%
increase
from
the
prior
year.

In
the

real
estate
sector,
there
has
been
an
increase
in
bad
actors
driving
fraudulent
activities.
The
title
insurance
industry
is
vigorously
battling
these
challenges
as
it
protects
Americans’
largest
asset,
their
homes.
In
fact,
a

new
study
notes
that
nearly
all
title
companies
surveyed
currently
provide
or
plan
to
provide
education
and
resources
to
train
employees
on
fraud.
The

title
industry
is
committed
to
combating
all
types
of
financial
crimes,
including
seller
impersonation
fraud,
wire
fraud,
elder
fraud,
and
money
laundering.

Seller
impersonation
fraud
occurs
when
fraudsters
impersonate
property
owners
to
sell
property
they
don’t
own.
Because
they
usually
target
non-owner-occupied
properties,
significant
time
can
pass
by
before
the
true
owner
discovers
the
fraud.
In
2023,

28%
of
title
insurance
companies
experienced
at
least
one
seller
impersonation
fraud
attempt
and
in
April
of
this
year
alone,
two
in
ten
title
companies
experienced
such
attempts.

Thankfully,
title
insurance
companies
have
deployed
tools
and
resources
in
place
to
catch
seller
impersonation
fraud
before
the
real
estate
closing
is
completed,
and
title
insurance
policies
can
provide
protection
for
those
buyers
who
do
fall
victim
to
seller
impersonation
fraud.

Another
area
of
growing
concern
is
real
estate
wire
fraud.
During
this
scheme,
hackers
impersonate
real
estate
professionals
and
trick
homebuyers
into
wiring
their
closing
cash
to
them. In
2022,
there
were

$446
million
in
losses
across
2,284
victims.

The
title
insurance
industry
has
continually
strengthened
its
digital
safety
and
security
procedures,
but
with
fraudsters
continuing
to
target
prospective
homebuyers,
ongoing
education
is
critical
to
prevent
wire
fraud.
The
title
industry
provides
professionals

with
resources
and
tools
they
can
utilize
to
educate
their
customers
about
how
they
can
protect
their
money,
whether
purchasing
a
new
home
or
refinancing
a
mortgage.

Elder
real
estate
fraud
and
financial
exploitation,
such
as
forged
or
coerced
signatures
on
legal
or
financial
documents
and
inappropriate
utilization
of
authority
under
a
Power
of
Attorney,
is
also
rising
at
an
alarming
rate.
The
FBI’s

Internet
Crime
Complaint
Center
(IC3) reported
that
almost
1,500
Americans
ages
60
and
older
lost
$65
million
in
real
estate
scams
in
2023.
Overall,
there
was
a
14%
increase
in
complaints
filed
by
elderly
victims
with
the
IC3
since
2022.

Our
industry
has
urged
a
collective
effort
between
the
private
sector
and
policymakers,
and
along
with
others,

have
outlined
ways
state
can
protect
elderly
Americans
from
the
fraud
and
financial
exploitation
that
could
jeopardize
their
financial
wellbeing,
including
barring
unfair
and
deceptive
long-term
real
estate
agreements,
and
enacting
and
enforcing
the
Uniform
Law
Commission’s
(ULC)
Uniform
Power
of
Attorney
Act.

Finally,
the
title
industry
is
also
working
with
the
federal
government
to
reduce
money
laundering.
The
title
industry
has
been
an
important
component
of
the
U.S.
Treasury
Department’s
Financial
Crimes
Enforcement
Network
(FinCEN)
efforts
over
the
last
eight
years
as
it
investigates
money
laundering
in
real
estate.
Through
its
Geographic
Targeting
Orders
(GTOs),
our
members
have
filed
beneficial
ownership
information
to
help
identify
bad
actors
behind
shell
corporations
used
in
all-cash
purchases
of
residential
real
estate.

For
our
industry,
protecting
property
rights
encompasses
far
more
than
ensuring
a
clean
ownership
title;
it’s
also
about
preventing
fraud
and
thwarting
fraud—a
role
we
are
proud
to
play
as
we
safeguard
the
American
Dream.