Home Mortgage Alliance Corporation (HMAC)

The latest in real estate fraud: Forgeries expertly aided by computer technology

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Published Date 4/5/2024

According to Realtor.com’s Keith Griffith, a pernicious form of real estate fraud is now on the rise, the consequences of which can be devastating for homeowners.

This new huckster practice is known as deed fraud or home title theft. It involves forging documents to record a phony transfer of property ownership. The criminals can then sell the home, take out a mortgage on it, or even rent it out to tenants to turn a profit — all while the true owners sit helpless, many not even knowing what is taking place behind the scenes.

Griffith cites the scary (recent) tale of a Detroit community organizer who was charged in a particularly egregious case. Zina Thomas, 60, stole more than 30 homes in and around the city by forging quitclaim deeds transferring the properties to fictitious entities, and then selling them to unwitting third parties.

To make the crime even more shocking, at the time of the alleged thefts, Thomas was working for the nonprofit United Community Housing Coalition, where she was director of homeownership programs.

“This scheme targeted some of our most financially vulnerable citizens and was perpetrated by an individual whose job it was to help those very people avoid losing their homes to foreclosure,” said Dawn N. Ison, the United States attorney for the Eastern District of Michigan, in a statement.

What should you know? Deed fraud often involves quitclaim deeds, which are simple legal documents that transfer ownership without any guarantees about the property. Their common legitimate use is to pass ownership between family members. But even home deeds, including more traditional warranty deeds, can be forged by increasingly sophisticated criminals, according to legal experts.

Computer technology is now at the heart of it, whereas a few decades ago it wasn’t easy to forge documents. Now every computer possesses the ability to create a believable forgery, and you can even buy a fake notary stamp online. It began appearing so quickly, it got ahead of the systems already in place to prevent it.

In his private practice, and before that as a prosecutor in the Los Angeles District Attorney’s Office, Los Angeles-based attorney David Fleck says he has dealt with scores of cases of home title theft. He cites one case where an elderly homeowner was evicted from her own house of 25 years, with her equity wiped out, after crooks forged foreclosure documents.

While there exist no national statistics tracking home title theft, the FBI’s 2023 Internet Crime Report tracked 9,521 complaints of cyber-related real estate and rental fraud last year, with losses totaling more than $145 million, according to Griffith. “A growing number of U.S. counties offer free services that allow residents to register their names with local officials who record deeds. If any documents are filed including those names, the county alerts the resident in question,” he says.

While you can also pay for services that offer similar monitoring, a homeowner I alerted only after a fraudulent title has been filed—they don’t prevent the crime from happening in the first place. So once a phony title is filed, the only way to resolve the issue is through a lawsuit to establish true ownership. That typically requires hiring a real estate attorney.

According to Fleck, the only true protection against title theft is through a specific type of policy, offered by any major insurer, known as a Homeowner’s Policy of Title Insurance. (This is not to be confused with the similarly named Owners Policy of Title Insurance.)

Under covered risks, the policy should include language to the effect of “Someone else claims to have rights affecting Your Title because of forgery or impersonation,” according to a policy template provided by the American Land Title Association trade association. Fleck says that all title insurance companies — all the big ones — now offer it, but you might have to make them do some research, as some of them don’t even know they do. While your traditional title insurance policy protects you against fraud before the purchase of a property, the Homeowner’s policy adds protection for home title theft after you own the property, says Fleck. Once that policy is in place, if you’re a victim of title theft, a quitclaim deed fraud, or any kind of deed fraud, you simply fill out a claim to your title insurance company, and they handle it for you.

In the Detroit case, prosecutors say the community organizer Thomas perpetrated a brazen scheme targeting the low-income homeowners she was tasked with helping to protect. “UCHC, the nonprofit where she works, provides eviction- and foreclosure-prevention assistance by offering free counseling services for income-eligible residents who own or occupy a home at risk of property tax or mortgage foreclosure,” says Griffith.

She did this in concert with a real estate agent, public notary, and other unnamed individuals to steal dozens of homes, according to the news story. “The victims included a cancer patient undergoing chemotherapy, who in October received an eviction notice ordering them to vacate their home in 30 days. The homeowner contested the eviction, and those proceedings remain ongoing,” says Griffith.

Thomas’ attorney did not respond to a request for comment from Realtor.com, and Thomas is currently free on a $10,000 unsecured bond, due in court on May 22.

Realtor,TBWS

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