Thieves forging ownership documents to your home to steal the property itself, sell it for gain, or refinance your mortgage to steal your equity is title theft. This type of identity theft is rare but poses a serious risk to your home and finances. Who is susceptible to title theft, how do you prevent it, and what if it happens to you? If you own a home, you should know how title theft works, how to avoid it, and what to do if it happens to you.
Key Takeaways:
- Home title theft is when fraudulent documents are used to transfer ownership of a home or appear to own a home to borrow money with no intent of repaying it.
- A thief could use a forged deed to cash-out your equity or sell your home and pocket the proceeds.
- You can protect yourself from home title theft by monitoring your bills, checking your credit report, and buying title insurance when you close on your home.
What Is Home Title Theft?
Home title theft, also known as deed theft, is when someone fraudulently claims ownership of a home that belongs to someone else. Title thieves then use their false ownership claim to sell the home for cash or refinance it to borrow and steal your equity.
Title thieves do this by assuming your identity using your personal information. Once a thief has that information, there are several ways they can steal your title:
- The thief poses as the owner to refinance the mortgage, withdraw the equity, and leave you to pay the new loan.
- The scammers use your home to get a home equity loan or open a home equity line of credit in your name. They then withdraw the cash and leave you to pay the bill.
- If they target unoccupied vacation homes or rental properties, thieves can use the forged deed to sell the home without your knowledge and pocket the proceeds.
- They could convince seniors or homeowners in crisis to supposedly refinance their mortgage, then use the information to document the transaction as a sale and take ownership of the property without your permission.
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How Worried Should You Be About Your Own Title?
According to the FBI’s Internet Crime Report, 9,521 real estate fraud complaints were filed in 2023, with more than $145 million in losses. It’s difficult to know how many of those complaints are specifically title fraud, but as identity theft has surged over the past 20 years incidents of title theft also have increased.
The most likely targets of deed theft are those with significant home equity who do not suspect fraud. Unfortunately, this means seniors are potential targets. In addition to the high amount of equity in their homes, seniors may be less tech-savvy or have health issues that make paying close attention to financial details more difficult.
Homeowners with second properties also are likely targets. Whether these are vacation homes or investment properties, distance makes unoccupied properties more vulnerable to rental or sale schemes that would be immediately noticed on your primary residence. If you own a second home, carefully monitor bills and notices, and visit the property regularly or have a trusted property manager check on the home.
How To Protect Yourself From Title Fraud
The first step to protecting yourself from title fraud is to be vigilant, as inattentive property owners are more vulnerable to title thieves.
Keep An Eye Out For Missing Bills
If regular bills and statements stop showing up or show changes when they do arrive, it could be a sign something is wrong. Keeping on top of your mail and bills can alert you early if something unusual occurs. This will also make sure you won’t overlook a notice of missed payment or foreclosure.
Monitor Your Credit And Credit Report
Monitoring your credit report is an effective way to catch signs of title fraud. Be on the lookout for unfamiliar purchases, credit cards you didn’t apply for, missed payments or other fraudulent charges. If you’ve been a victim of identity theft or just want extra protection, consider paying for a credit monitoring service that will alert you to unusual activity.
Buy Title Insurance
When you buy a home, a title company will review your home’s legal history and verify that the title is free and clear of any ownership disputes or liens. Your lender will require you to pay for title insurance when you buy the home, which protects the lender in case problems with the title emerge after the sale. When you close on your home, you can also buy owner’s title insurance to protect you in the same way. Title insurance is a one-time fee often included with closing costs when you buy your home.
Enroll In Title Protection Services
Title protection services have come under fire recently because homeowners can check their title status and land records on their own or sign up for a free text notification service. Since these services provide already free and available information, many have discounted them as not worth it.
That may be true if you have an owner’s title insurance policy that would protect you in this scenario. But if you opted out of title insurance, a service that monitors your records for $15 a month could be worth it.
Beware of scammers posing as title protection services. Do your research, and don’t respond to unknown texts, calls or emails that could be phishing schemes or other cons. If you sign up for title protection, contact a reputable company directly to enroll.
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What Are The Consequences Of Title Theft?
If someone steals your property title, you will need to go to court to invalidate any transfers or loans the thieves took out in your name. This can take a long time and be very expensive, especially if you don’t have an owner’s title insurance policy that covers these costs. Until the case is resolved, you may legally be responsible for any loans the thieves took out in your name, and ownership of your home will be in legal limbo.
What To Do If Your Property Title Is Stolen
If title theft is identified early, immediate action can limit the damage. If you suspect title theft, follow these steps to protect yourself:
- Contact your lender. Notify your lender immediately. They will likely have their own protocol for cases of suspected title theft that can help you protect your home and equity.
- Place a fraud alert on your credit report. Notify the credit bureaus that you’ve been a victim of identity theft. They can place a free fraud alert on your account, requiring businesses to confirm your identity before issuing credit in your name.
- Report the identity theft to the Federal Trade Commission. Visit IdentityTheft.gov or call 877-438-4338 for an identity theft report from the FTC. This document will prove to businesses and creditors that you’ve been a victim of identity theft.
- File a report with your local police department. Take your FTC identity theft report and any other proof of theft to the police and file a report.
- Contact any other companies where the fraud occurred. Let them know that someone has stolen your identity, ask them to freeze your accounts, and change your passwords.
Following these steps is vital to alert your lender and officials of the potential fraud immediately. Calling applicable companies, such as your mortgage lender and your title insurance company, will start the ball rolling on investigating the scam.
If you suspect title theft, you should also check for other signs of identity theft by pulling your credit report and checking your other financial statements. For example, you’ll want to check for new credit cards, personal loans or car loans you didn’t apply for.
FAQ
Here are answers to common questions about home title theft.
The Bottom Line
Home title theft is a serious threat that can have a devastating impact if it goes undetected. Luckily, you can take steps to protect yourself and your home, like watching for missing bills, keeping an eye on your credit report, and buying title insurance. Being alert is key to protecting yourself and your home from title theft.
Victoria Araj contributed to the reporting of this article.
Rory Arnold
Rory Arnold is a Los Angeles-based writer who has contributed to a variety of publications, including Quicken Loans, LowerMyBills, Ranker, Earth.com and JerseyDigs. He has also been quoted in The Atlantic. Rory received his Bachelor of Science in Media, Culture and Communication from New York University. He also completed the SoFi/Coursera Fundamentals of Personal Finance Specialization consisting of five courses: Introduction to Personal Finance, Saving Money for the Future, Managing Debt, Fundamentals of Investing, and Risk Management in Personal Finance.
