The Difference Between Mortgage Fraud and Home Title Fraud

Fraud and phishing scams are nothing new. But when it affects the most significant financial investment of your life, things can become downright scary. You may feel like you’d never fall for real estate fraud like this, but these scams often more complicated. They usually appear as legitimate conversations with your settlement agent. But it’s just a scammer who hacked their emails, waited for the closing moment of the transaction, then gave false instructions to reroute the closing funds.

On the other hand, property title fraud is one of the fastest-growing cybercrimes in America. Once someone’s able to steal your identity, they’ll transfer the title of your home from your name to theirs. They’ll then use your home as collateral to obtain multiple loans that they never intend to pay back. As a homeowner who’s a victim to title fraud, you’ll never know about it until your bank sends you a foreclosure notice.

Mortgage Fraud vs. Title Fraud

With mortgage fraud, FBI reports suggest the closing process is where scammers take advantage of homebuyers through phishing scams where they attempt to divert your closing costs and down payment into a fraudulent account with last-minute alterations to your wiring instructions. There’s been an estimated loss of $1 billion in real estate transaction costs recently.

Recently, the FBI reported well over 300,000 wire fraud complaints that resulted in losses of $1.04 billion. If you narrow that down to wire fraud that deals with real estate, there were over 9,600 people who lost $56 million in total. While not every loss involves title fraud, the prevalence of wire frauds is astounding.

How to Protect Yourself

To avoid a mortgage phishing scam, first, identify two trustworthy people to confirm the closing process and payment instructions. Then write down their names and contact information. Before you wire any money, always verify the instructions with those trusted representatives. Avoid using links or phone numbers in your emails, and never any financial information. You should also be mindful of phone conversations as well when it comes to wiring information.

Older homeowners, especially ones with equity, and owners of second homes, vacation homes, and investment properties are most vulnerable to home title fraud. Because it’s mostly the same as identity fraud, the best to implement property title protection is to keep an eye on your credit report regularly, watch your paper bills, verify your home information now and then with the county deed office, and protect your title with a homeowner’s title insurance policy.

If you’ve been a victim of property title fraud, you’ll want to notify the credit reporting agencies as soon as possible and consider filing a report with your local police department.

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