Q: I received an offer in the mail from a company in San Diego. They offer a service to protect the title on our home from someone stealing it to take out loans for credit lines and second mortgages without our knowledge. According to the company, these thieves would take the money and leave us with the legal obligation to pay back the funds.
Is this kind of fraud even possible? Do we need this service? I’m sure others have received this mailing. Any information would be appreciated. Thank you.
A: There are a multitude of businesses out there trying to make money offering services that you may or may not need. Be vigilant when you assess these offers, since many may themselves be scams. You certainly don’t want to give out any personal information to any company or person without understanding what you’re getting into and without verifying the company independently.
Sometimes companies send out mailings to homes offering services that a homeowner might get free from a government service. In some states, you’re entitled to a reduction on your home’s real estate taxes if you live in the home as a primary residence. For the most part, you simply fill out a form with the taxing jurisdiction to get the discount. However, some companies monitor homeowners’ tax bills and will send out mailings letting homeowners know that they provide them with a service to get a tax reduction for a fee.
In other jurisdictions, the office that handles the recording or filing of real estate documents may offer a service that will notify homeowners if a document transferring ownership of the home has been recorded or filed. Ask if your local recorder of deeds office or other office that handles the recording of documents provides that service to homeowners. If they do, you can simply sign up for their automated system, which will send you information if something changes on your title. And, yes, there are companies that offer this service for a fee even though you may be able to get access to the same information free.
You asked if this is even a “thing.” Yes, it’s fraud and it happens. Some homeowners have lost hundreds of thousands of dollars in equity in the blink of an eye.
Here’s a brief description of how you transfer ownership of a home from a seller to a buyer. A seller prepares a document conveying the seller’s ownership interest in the home to a buyer and that document then gets filed or recorded with the office that handles the land records where the home is located. It’s that simple. (In some places, they may use a title registration system and the manner in which you file documents may require some additional steps.)
If someone steals your title, they will have to create documentation that says they are you and fraudulently sign the transfer documents to themselves. Then, they’ll try to get a loan against the equity (cash-out refinance or home equity loan or line of credit) and immediately strip out the equity.
If you live in the home you own, it’s unlikely that you would need any title protection services. From what we can gather online, these services will monitor any documents that may get recorded against the title to your home. These services claim that they will assist you if someone records something against the title to your home that they should not have done. However, their service can come with a monthly charge of around $20. That is not a small amount.
Frankly, if you’re concerned about your credit and home equity, you might be better off freezing your credit with the credit reporting bureaus. Once you do this, a fraudster would have a hard time impersonating you to try to obtain credit or a mortgage using your name.
Sam has come across situations where a fraudster used fraudulent documents to change the ownership of the home from the legitimate owner to the fraudster. Then, the fraudster sold the home under their own name. However, it’s harder to do this when you live in your own home. When you live in your own home, buyers will want to see the home or lenders will want to access the home for mortgage purposes. As such, it’s unlikely that a scam artist will try to do this when you can see people coming to your door.
Over the years, we’ve seen companies offering insurance that protects the value of your home. If the value goes down and you sell, they pay you some of the difference. Other companies will provide a method that claims to “lock” the title to your home to protect you. You also have warranty companies that will service and replace appliances and fixtures in your home should they break down. If you were to obtain all of these services, you’d be out thousands of dollars each year.
Our advice is to stay vigilant, and find out if you can go online and look for any changes on the title to your home. If you can, then monitor the online system every couple of months. Next, freeze your credit with the three major credit bureaus and you’ll be well on your way to protecting your single largest asset — while saving yourself some money along the way.
If any of our readers have had any positive experiences with companies that provide this title service when a fraudster has recorded a document against you, please let us know how things turned out. We’ll share the information in a future column.
Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (Fourth Edition). She is also the chief executive of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them through the website, BestMoneyMoves.com.
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