Home Title Theft: What You Should Know And How To Prevent It

The typical homeowner usually believes their home is one of their most significant investments, making it all the more important to safeguard yourself and your home from common scams. Homeowners who experience identity theft are especially vulnerable to home title theft. We’ll explain how to avoid home title theft and report it if you suspect someone is using your financial information.

What Is Home Title Theft?

Home title theft is when someone steals your identity and transfers your house title to their name to steal money or property. Identity theft is usually the first step in title fraud because the thief needs to make the forged home deed look legitimate.

Home title theft comes in several forms, including:

• Refinance fraud: In a fraudulent refinance scheme, a person withdraws equity from your home and leaves you with a new mortgage. While they don’t own your home, they can use your identity to steal money from it.
• Home equity line of credit (HELOC) fraud: Someone can access your home equity through a HELOC and rack up a mountain of debt you’re on the hook to pay back until you can prove you didn’t borrow the money.
• Forged deeds: Thieves can forge deeds to sell vacant real estate, such as rental buildings or vacation homes.
• Faked opportunities: A scammer can present a fake refinancing opportunity to homeowners facing financial hardship. When the homeowner signs the paperwork at closing, they unknowingly sign away their property ownership to the scammer.

How Common Is Home Title Theft?

Are you wondering: “Is home title theft real?” It is. And it’s emotionally and potentially financially disastrous for its victims. Fortunately, it’s infrequent.

Homeowners usually have layers of protection – from insurance policies to lenders and government entities – to safeguard them from home title theft. But just because it’s uncommon doesn’t mean it can’t happen. Take all necessary steps to help ensure you don’t fall victim to home title theft.

Signs Of Home Title Theft

Watch out for several signs that indicate home title theft is occurring or about to occur. Typical signs to pay attention to include:

• The sudden appearance of unfamiliar items on your credit report, such as mortgages and lenders you don’t recognize.
• The disappearance of customary homeowner mail, like bills and notices, or getting mail for financial products you didn’t apply for.
• A credit monitoring service notifying you of identity theft or illegal activity.
• A real estate professional contacting you directly with an offer or charging upfront fees.

How To Prevent Home Title Theft

Home title theft can have dire consequences. Fortunately, homeowners can take several measures to protect themselves.

1. Keep Track Of All Bills And Homeowner Mail

To maintain good financial standing, homeowners must stay on top of their routine bills, such as utility bills and mortgage payment notices. If specific bills stop arriving or you receive unfamiliar mortgage paperwork, it may be a sign that someone is tampering with your home title.

Since you’ll receive a lot of mail with your new mortgage, keeping track of it is essential to preventing theft and fraud.

2. Check Your Credit Report Routinely

Frequently checking your credit report is an excellent practice for long-term financial health. Homeowners should periodically scan their reports for suspicious activity. If you see a new loan or lender you don’t recognize, that will require further investigation because it’s a red flag for a scam. You can also pay for a monitoring service to track changes in your credit reports 24/7.

3. Obtain Title Insurance

There are two types of title insurance: lenders and homeowners title insurance. When you buy a home, your lender will require you to purchase title insurance to protect them from financial losses if a problem with the title doesn’t allow you to transfer ownership of the property. In other words, the insurance helps guarantee a legitimate sale and covers a lender’s financial losses if it isn’t.

Homeowners title insurance protects you after buying a home. If undiscovered liens or financial claims come up, your policy will pay your legal fees and defend your right to stay in your home. An owner’s title insurance policy also protects homeowners from fraudulent claims that challenge their homeownership.

4. Stay Up To Date On Common Scams

Understanding and identifying common mortgage scams that target homeowners can help you steer clear of theft. Scammers might pose as real estate agents or lenders to perform fraudulent transactions or steal your identity. Some specialize in reverse mortgage scams, leaving older homeowners saddled with debt or no home.

If a deal or mortgage interest rate sounds too good to be true – it probably is. Scammers often lure unsuspecting homeowners with incredible deals to steal personal and financial information.

Reporting Home Title Theft

Homeowners who are victims of home title theft or detect suspicious activity should take the following steps:

1. Contact your lender: Call your lender’s fraud department if you think scammers have used your identity to steal money or your home. Your lender will freeze your account to prevent further activity.
2. Change your mortgage credentials: Create new login credentials for your mortgage and consumer accounts, such as credit cards and bank accounts. You should also file an identity theft claim with the Federal Trade Commission (FTC).
3. Notify a credit bureau: Inform one of the three credit bureaus (Equifax^®, TransUnion^® and Experian™) of identity theft. The entity you contact will forward the information to the other bureaus. You should get a copy of your credit report from each bureau to ensure the theft was recorded.
4. Visit your local police department: Bring your ID, proof of address, FTC identity theft claim and relevant documents that prove home title theft.

The Bottom Line

Home title theft is real and can wreck a homeowner’s life and finances. When someone gets a hold of your personal and financial information, they can take out new debts against your home and walk away with the cash or even transfer ownership. That’s why it’s crucial to monitor your financial information and report suspicious activity as soon as you detect it to your lender and relevant authorities.

To help shield your home from fraud, learn about seven dangerous real estate scams and stay one step ahead of the scammers and their schemes.