Is this kind of fraud even possible? Do we need this service? I’m sure others have received this email. Any information would be appreciated. Thanks.
A: There are a multitude of companies trying to make money by offering services that you may or may not need. Be careful when evaluating these offers, as many may themselves be scams. You certainly don’t want to divulge personal information to any company or person without understanding what you’re getting into and independently verifying the company.
Sometimes companies send out mailings to homes offering services that a homeowner can get for free from a government service. In some states, you are entitled to a reduction in the property taxes of your home if you live there as your primary residence. For the most part, all you have to do is fill out a form with the taxing jurisdiction to get the reduction. However, some companies monitor homeowners’ tax bills and will send out mailings informing homeowners that they are providing a service to them to obtain a tax reduction for a fee.
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In other jurisdictions, the office that handles the registration or filing of real estate documents may offer a service that will notify homeowners whether a document transferring ownership of the home has been registered or filed. Ask if your local registry office or another office that handles document registration provides this service to landlords. If they do, you can simply sign up for their automated system, which will send you information if anything changes on your title. And, yes, there are companies that offer this service for a fee, although you can get access to the same information for free.
You asked if it was even a “thing”. Yes, it is fraud and it happens. Some owners have lost hundreds of thousands of dollars in equity in the blink of an eye.
Here is 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 of the house to a buyer and this document is then filed or registered with the office that maintains the land records where the house is located. It’s so simple. (In some places they may use a title registration system and how you file the documents may require additional steps.)
If someone steals your title, they will have to create documentation that says they are you and fraudulently sign the transfer documents for themselves. Then they will try to get a home equity loan (cash refinance or home equity loan or line of credit) and immediately withdraw the equity.
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If you live in the home you own, you are unlikely to need title protection services. From what we can gather online, these services will monitor any documents that may be registered against the title to your home. These services claim they will help you if someone registers something against your home’s title that they shouldn’t have done. However, their service may incur a monthly fee of around $20. It is not a small sum.
Frankly, if you’re concerned about your credit and the equity in your home, you might be better off freezing your credit with the credit bureaus. Once you’ve done this, a fraudster would have a hard time impersonating you in an attempt to obtain credit or a mortgage using your name.
Sam has come across situations where a fraudster has used fraudulent documents to change ownership of the home from the rightful owner to the fraudster. Then the fraudster sold the house under his own name. However, it is more difficult to do this when you live in your own home. When you live in your own home, buyers will want to see the house or lenders will want to access the house for mortgage purposes. As such, a scammer is unlikely to try to do this when you can see people coming to your doorstep.
Over the years we have seen companies offer insurance that protects the value of your home. If the value goes down and you sell, they pay you part of the difference. Other companies will provide a method that claims to “lock” your home title to protect you. You also have warranty companies that will repair and replace appliances and fixtures in your home if they break down. If you were to get all of these services, you would lose thousands of dollars every year.
Our advice is to stay alert and find out if you can go online and research any changes to your home title. If you can, monitor the system online every two months. Then, freeze your credit with all three major credit bureaus and you’ll be well on your way to protecting your most important asset, while saving money along the way.
If any of our readers have had positive experiences with companies that provide this title service when a fraudster has registered a document against you, please let us know how things turned out. We will 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 Managing Director of Best Money Moves, an app employers provide to employees to measure and reduce financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them via the website, BestMoneyMoves.com.