The title industry is working to tackle fraud

The Merriam-Webster Dictionary defines fraud as the “intentional perversion of the truth to induce another to part with something of value or to relinquish a legal right,” and from identity theft to sweepstakes and investment fraud, it can take numerous forms at any given time. high costs for the consumer. The Federal Trade Commission (FTC) reported that American consumers will lose $10 billion to fraud by 2023, an increase of 14% from the previous year.

In the real estate industry, there has been an increase in bad actors driving fraudulent activities. The title insurance industry is meeting these challenges head on as it protects Americans’ greatest asset, their homes. In fact, a new survey shows that nearly all title companies surveyed currently offer or plan to offer education and resources to train employees on fraud. The title industry is committed to combating all types of financial crimes, including seller impersonation fraud, bank fraud, elder fraud and money laundering.

Seller impersonation fraud occurs when fraudsters pose as property owners to sell property they do not own. Because they usually target non-owner occupied properties, it can take quite some time for the real owner to discover the fraud. By 2023, 28% of insurance companies have experienced at least one salesperson impersonation fraud attempt, and in April this year alone, two in 10 insurance companies experienced such attempts.

Fortunately, insurance companies have tools and resources in place to detect seller impersonation fraud before the closing of the property, and title insurance policies can provide protection for buyers who fall victim to seller impersonation fraud.

Another area of ​​growing concern is real estate transaction fraud. During this scheme, hackers pose as real estate professionals and trick home buyers into transferring their closing funds to them. There were in 2022 $446 million in losses among 2,284 casualties.

The title insurance industry has continually strengthened its digital safety and security procedures, but as fraudsters continue to target potential homebuyers, continuing education is critical to preventing wire fraud. The title industry provides professionals with resources and tools they can use to educate their clients on how to protect their money, whether it’s buying a new home or refinancing a mortgage.

Legacy real estate fraud and financial exploitation, such as forged or coerced signatures on legal or financial documents and improper use of powers under a power of attorney, are also increasing at an alarming rate. The FBI’s Internet Crime Complaints Center (IC3) reported that nearly 1,500 Americans age 60 and older lost $65 million to real estate scams in 2023. In total, there has been a 14% increase in the number of complaints filed with the IC3 by older victims since 2022.

Our industry has pushed for a collective effort between the private sector and policymakers, and together with others ways have been outlined The state can protect older Americans from fraud and financial exploitation that could jeopardize their financial well-being, including prohibiting unfair and deceptive long-term real estate deals and enacting and enforcing the Uniform Law’s Uniform Power of Attorney Act Commission (ULC).

Finally, the title industry is also working with the federal government to reduce money laundering. Over the past eight years, the title industry has been a key part of the efforts of the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which investigates real estate money laundering. Through their Geographic Targeting Orders (GTOs), our members have submitted beneficial ownership information to help identify bad actors behind shell companies used in the cash purchase of residential real estate.

For our industry, protecting property rights involves much more than ensuring clean title; it’s also about preventing and combating fraud – a role we’re proud to play in securing the American Dream.

Diane Tomb is the CEO of the American Land Title Association.

This column does not necessarily reflect the opinion of HousingWire’s editorial staff and its owners.

To contact the editor responsible for this piece: [email protected]