Fear and loathing about title fraud

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If you listen to the radio, you couldn’t have missed the incessant ads for what is called “home title lock insurance.”

It is not insurance, and it does not lock your home title against fraud. It is a monitoring service that informs you after the fact that an attempted sale of your property has been recorded, or an incumbrance like a mortgage has been filed.  You pay a lot of money annually for this monitoring, as much as $180.

First, what is the fraud? A person who claims to be the property owner “sells” your house by executing a forged deed. Or the fraudster uses a fake mortgage application to “borrow” money on your house. Neither of these scams ultimately works: Your house still belongs to you and you don’t need to pay down on the mortgage that you never took out. But, as the Wall Street Journal stated: “[R]estoring your title and clearing the property of any fraudulent mortgages can be a lengthy and expensive process.”

Two questions immediately arise: First, how frequent is this fraud? Second, are there alternatives to protect your property to paying a monitoring service?

As to the first question, there are different views. The Journal reported the register of deeds for the Northern District of Middlesex County, Massachusetts, as saying that in 29 years he had seen only one case of title fraud, and the property was vacant and the owners deceased. Yet, almost four months later, the Journal quoted a title company executive and real estate fraud expert as saying that “due in part to changes in technology, there has been a sharp increase in title fraud and seller impersonation across the country.”

What does Maryland say? Former Attorney General Brian Frosh is on the rare and self-help side: “Title fraud is very rare, and hardly ever successful. If someone ever tries to transfer your deed without your permission or knowledge, like these title lock companies suggest could happen, the transfer is fraudulent and void from the outset.” He does not opine on the cost to the true owner of clearing up his or her impaired title.

Frosh recommends a diligent effort to monitor and protect your identity: pay attention to the credit reporting agencies.  (He doesn’t say freeze your credit, but others do, as a general practice, and to discourage title fraud.)  Frosh states: “[P]eriodically (how often?) check your title with your state land records office.”  He further suggests that you watch for strange bills and calls regarding your property.

Is there an alternative? Yes, and a number of jurisdictions across the country offer it: a low-cost monitoring system that allows homeowners to register their property/ies for free, and receive the same notice that the radio advertisers offer for a price.  Montgomery County has such a system:

Property owners can set-up their profile(s) online through our Public Access System and receive alerts if a document is recorded at our office against the information included in their profile. . . . This tool is being offered to allow Montgomery County property owners to be involved in combating fraud. This program alerts the property owner shortly after a document matching the criteria completed in their user profile is recorded.

That’s Montgomery County, Pennsylvania.  Montgomery County, Ohio, has instituted a similar service, the free Fraud Alert Notification System, and its Recorder’s Office states: “Cases of property and mortgage fraud are at an all-time high both locally and nationally.”

Our Montgomery County apparently does not offer a monitoring service, advising through its Office of Consumer Protection that title fraud is rare and that internal barriers to successful fraud are robust. But, just in case and for peace of mind, “Locally, residential land records are maintained in the Circuit Court of Montgomery County. Homeowners can search the land records online for free to see if any improper deeds, liens, or documents have been filed without the homeowner’s knowledge.”

Carroll County also provides its property owners with a monitoring service. That is Carroll County, New Hampshire. If you have a summer property in Lee County, Florida, which includes Fort Myers, you can claim the benefit of a Property Fraud Alert Registration.

There is a question about whether government has a duty to protect its citizens from their own inattention and lack of due diligence in keeping their identities—and property—secure from theft. Perhaps not, but home title is secured through county offices, and another layer of protection may well be warranted. We have read that to install the system costs perhaps $4,000, and that hiring a vendor to maintain it costs an annual fee that is less than that.

Perhaps Maryland’s jurisdictions should rethink whether an alert system might be an appropriate use of tax resources to shore up a system that may be in need of further protection.

EDITORIAL ADVISORY BOARD MEMBERS

James B. Astrachan, Chair

James K. Archibald

Gary E. Bair

Eric Easton

Arthur F. Fergenson

Nancy Forster

Susan Francis

Julie C. Janofsky

Ericka N. King

George Nilson

Catherine Curran O’Malley

Angela W. Russell

Debra G. Schubert

Jeff Sovern

H. Mark Stichel

The Daily Record Editorial Advisory Board is composed of members of the legal profession who serve voluntarily and are independent of The Daily Record. Through their ongoing exchange of views, members of the board attempt to develop consensus on issues of importance to the bench, bar and public. When their minds meet, unsigned opinions will result. When they differ, or if a conflict exists, majority views and the names of members who do not participate will appear. Members of the community are invited to contribute letters to the editor and/or columns about opinions expressed by the Editorial Advisory Board.