Title stealing company lies to consumers
Calculating people are always looking for ways to separate the rest of us from our money. Such appears to be the case with Home Title Lock, an outfit that promises to “protect” you from home title theft.
Title theft occurs when a criminal takes ownership of your home and either sells it or mortgages it. The bad guys do this by simply forging your name on a deed and recording it with county officials. The county clerk is required to include the title in the records but not to verify its legality. If the certificate is not obviously forged, it will of course be recorded.
To “protect” homeowners from this scam, Home Title Lock said it monitors a subscriber’s title 24/7 and notifies them immediately if someone tampers with it. The cost: $19.95 per month.
There’s no telling how common home title theft is. But the company, whose spokespersons include ousted attorney Rudy Giuliani and former House Speaker Newt Gingrich, claims it happens regularly. In fact, the company claims that the FBI ranks home title theft as “one of the fastest growing” crimes in America.
ABC News has thoroughly dismissed that claim, along with the baseless claims made by two alleged victims of the crime.
Speaker tries to mislead reporters
In a major story published in mid-June, the network said the FBI had no evidence it ever made such a claim. Another Title Lock spokesman, former FBI agent Art Pfizenmayer, submitted a document to ABC to try to justify the claim. But the document he produced was almost two decades old and “did not involve property theft at all,” but rather mortgage fraud, ABC found.
As the network points out, the two are vastly different: “Mortgage fraud involves lying to lenders in order to obtain credit, while property theft involves filing fraudulent documents with county authorities to claim ownership of a property.”
ABC also checked numerous sources to see how widespread title theft really is. While some jurisdictions said it wasn’t common, others said it was an epidemic.
But Steve Gottheim, general counsel of the American Land Title Association (ALTA), told ABC that its members “are not seeing [title theft] nationwide”.
Others say the same.
“If it happens once a year, I’d be surprised,” Boston National Title’s Nathan Bossers told me.
“It’s rare from what I could find,” Colleen Taylor of the Old Republic National Title Insurance Co. wrote in a trade magazine in March.
ABC asked Home Title Lock how many title theft cases it found, as well as any situations the service has helped someone recover a stolen title, and how much was spent to cover a client’s legal fees. No such information is forthcoming, the network said.
Buyer on the hook
And here’s the catch: Even if Home Title Lock notices something’s wrong with your title, you largely have to take care of it yourself.
It would be “extremely valuable” for a company to pay the legal fees needed to clear the title of a forged document, real estate attorney William Maffucci told Smart Business Philadelphia. “But that’s a huge ‘if’. I am not aware of any “title theft” protection provider that does this. If so, Maffucci said, the service “would almost certainly cost a lot more.”
Diane Tomb, CEO of ALTA, agreed.
“Paid surveillance services send notifications to clients when documents of any kind are filed,” she told me. “These companies are not title insurers and typically do not pay to protect a consumer’s property rights.”
Rather than subscribing to Title Home Lock or a similar service, savvy owners can check in with their scribe’s office as often as they like. In some places, you can sign up to receive free notifications when any document is filed against your accommodation’s address.
Even if a forged deed is filed on your property, Maffucci says, the document doesn’t say anything because it’s not legal.
Tomb agrees, “A false deed will not result in the current owner losing title.”
Theft is still an expensive problem
Still, title theft can have “devastating effects” on the homeowner, Maffucci said. Homeowners must hire an attorney and file a lawsuit to erase the title, which can be a lengthy and expensive process.
But first, think back to the time you bought your home. If you needed a mortgage, you almost certainly have title insurance to protect your lender from defects in your home’s lineage that could tarnish your ownership. You also likely had the option of purchasing a separate title policy that protected you.
Because regular title insurance protects against defects that have arisen up to the date of title acquisition, it does not help against title fraud. But so-called extended policies usually cover post-policy forgery and other possibilities.
Extended policy offers range from 10 to 40 percent above the premium for a regular title policy. Make sure your policy covers title theft before signing up.
If you didn’t buy such coverage at the closing, you can buy it now, Bossers says. If you want to cover the cost of your home when you buy it, coverage will cost about the same as it did back then. However, if you want to cover the current value, you pay more.
Meanwhile, regular title insurance protects a buyer who unknowingly buys a home from someone who used a fake title to pretend to be the owner. But buyers should also consider extended coverage. After all, if you were a buy-in victim, you could also be a sell-out victim.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous animal shelter magazines and publications in the homebuilding and home finance industry. Readers can contact him at [email protected]