I see this question often in social media, and the short answer is: There is no simple solution.
Home title theft (aka deed fraud) has appeared more and more often over the last few years in news reports and in advertisements by title monitoring services like TitleShield™ and Home Title Lock. A reasonable reaction to this growing problem is to wonder why “the government” has not taken much action to prevent it. The primary reason for the minimal response is that people (even government types!) generally don’t really understand why deed fraud is on the rise. I’ve been fighting the perpetrators of this crime for 20 years in court, so I have a big head start on everyone else.
What is home title theft?
Home title theft is a relatively new form of identity theft.
To commit this crime, a con artist forges the name and signature of a homeowner. Then he either impersonates the homeowner in front of a notary by using a high-quality fake ID, or he simply forges the notary’s name, signature, and stamp. Not surprisingly, fake notary stamps can be obtained easily on the internet.
The fraudulent deed appears to show that the true homeowner sold the property to the con artist (or to a stolen identity or shell company he controls). Next, the con artist files the deed with the county clerk, which then makes it appear that he owns and controls the property.
To obtain the financial benefit of this crime, the con artist next needs to use the property as collateral for a mortgage or sell it to unsuspecting buyers. Most often, the criminal will take out a mortgage from a hard money lender rather than a conventional lender because typically hard money lenders do very little due diligence other than to determine the value of the property, and they will lend up to 65% of the value (give or take). Similarly, if the con artist wants to sell the property, he will sell it to a flipping company at 65% of the value so the flipping company can borrow hard money.
What does the true homeowner have to do when they find out about this crime?
Once the homeowner discovers that they are a victim of home title theft, they must take steps to remove the fraudulent deed from the title history of the property. The only way to do this is by court order, which means the true homeowner must file a lawsuit to do so. Many victims complain that their county clerk won’t simply delete the fraudulent deed, but if you put yourself in the clerk’s shoes, you must realize that they have no way of knowing if the true homeowner is telling the truth or not. They are not God. They are not omniscient. In our society, it is the job of judges and juries to determine who the true owner is.
While the law is on the victim’s side, many of them are elderly or are simply not very savvy when it comes to situations like these. If they wait too long or hire an inexperienced attorney, they might (and often do) lose their homes.
Why haven’t I heard of home title theft until recently?
For hundreds of years, notaries were very effective guardians against forged deeds. Their job has always been to verify that the person signing the deed is actually the person they claim to be. Then they stamp the deed with their official seal so other people who need to rely on that deed know that the correct person signed the deed.
Things changed about 20-25 years ago. Before then, it was very hard to obtain high quality fake IDs, and it was very hard to forge documents and notary seals. Now, anyone can go on the internet to buy a fake ID that can’t be detected by the naked eye and a fake notary stamp. They literally can buy a fake notary stamp with any notary’s name on it.
Some people look at this situation and believe that the only solution is to scrap the entire system of recording deeds, but this is not true. There are very good solutions.
What are the solutions?
The first company to offer a solution to the growing crime of home title theft was Home Title Lock, which offers a title monitoring service. They were quickly followed by TitleShield™ and LifeLock which offer similar services. (Full disclosure: I created TitleShield™ based on my 20 years of experience fighting this crime.)
Home title monitoring is a partial and imperfect solutions, but the simple fact is that it is currently the ONLY solution available everywhere in the US. No title monitoring service can prevent the con artist from filing the first fraudulent deed, but in many cases, it can notify the homeowner of the crime early enough for the homeowner to prevent the criminal from taking the second step to sell or mortgage the property. This substantially reduces the difficulty of unwinding the damage because there will be fewer parties to the necessary lawsuit.
Since the advent of title monitoring services, many counties have begun to offer this service to their constituents for free. I keep a rough tally of the number, and approximately 10% of counties nationwide now offer title monitoring.
Are there complete solutions to home title theft?
The good news is that there is technology to completely prevent home title theft. Again, I don’t want to come across as bragging (I’m not), but because of the twists and turns of my legal career, I simply started dealing with this issue long before it was on anybody else’s radar, so I have a much better understanding of the problem.
Veritable Data Solutions (my company) has developed a system that uses cutting-edge identity verification technology and blockchain technology to give notaries the 21st century tools they need to do the job they have always done. With the Veri-Lock® e-Journal, the notary can screen and confidently reject fake IDs…even those that can’t be detected by the naked eye.
Further, the app ensures that both the signer and the notary were present at the time and place of the signing to prevent false impersonation and forged documents. Lastly, it uses proprietary blockchain technology to create a permanent, unalterable record of the details of the transaction and a copy of the notarized document. This enables subsequent viewers of the document, such as title agents, lawyers, and county clerk employees, to rely once again on the notary stamp. (Sidebar: Veritable uses its blockchain to permanently secure data, but it does not issue cryptocurrency like other blockchain companies.)
If every document in a jurisdiction were notarized with the technology used in the Veri-Lock® e-Journal, then home title theft would become almost impossible because it empowers notaries with 21st century technology. Cities, counties or states must require the use of Veri-Lock® or similar technology by other companies to end the scourge of home title theft.
Conclusion
Home title theft is a complex crime that circumvented a fraud prevention system that had worked for 100s of years. There is no simple solution, but there is an effective solution. Governments need to require notaries to use existing technology to make their stamps meaningful again.
David Fleck is a trial lawyer and former criminal prosecutor who has battled import fraud, deed fraud, investment fraud, forgery and embezzlement since 1997. He is also the CEO of Veritable Data Solutions, Inc. which has created the only complete solution to the growing epidemic of home title theft. Follow him on Twitter as @DavidFleckEsq and on Facebook as Law Office of David L. Fleck, Inc.