Identity Theft + Mortgage Fraud = Home Stealing

Scammers are combining identity theft and mortgage fraud to steal people’s houses right from under them, the FBI warns. A few cases have been reported where thieves find house, figure out who owns it, assume their identity, then forge signatures on the paperwork, get the deed transferred over to themselves, and then quickly sell it and run off. In some cases, victims were left paying the mortgage on a house they no longer own. To combat it, the FBI recommends:

* If you receive a payment book or information from a mortgage company that’s not yours, whether your name is on the envelope or not, don’t just throw it away. Open it, figure out what it says, and follow up with the company that sent it.
* From time to time, it’s also a good idea to check all information pertaining to your house through your county’s deeds office. If you see any paperwork you don’t recognize or any signature that is not yours, look into it.

Thankfully they also say that “home stealing” so far does not appear to be very common.

HOUSE STEALING: The Latest Scam on the Block [FBI] (Thanks to Sean!)
(Photo: Getty)

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  1. Dobernala says:

    If you receive a payment book or information from a mortgage company that’s not yours, whether your name is on the envelope or not, don’t just throw it away. Open it, figure out what it says, and follow up with the company that sent it.

    Isn’t it illegal to open mail that is not addressed to you?

  2. myasir says:

    @Dobernala:
    It’s also illegal to steal someone’s identity and sell their house out from under them.

  3. BrentNewland says:

    Hmmm… it’s not common yet. Posting a bunch of alerts isn’t going to help anyone.

  4. JohnMc says:

    Nasty I must say. But there is a preventative measure one could take to prevent this. It would stand to reason that the thieves are looking for homes that have a high level of equity otherwise it would not be worth their time. One could take out a HELOC on the equity spread. That is recorded. Make you less of a target.

  5. evenkevin says:

    LOVE the graphic!

  6. pegr says:

    Why would I not own the home anymore if the transfer was fraudulant? Sure, a judge would have to get involved, but why would the homeowner have to take the hit?

    Oh, because the bank never takes the hit, that’s right…

    • Anonymous says:

      @pegr: Actually it’s the Title Insurance company who insured the fraudulent transfer and mortgage who would take the hit.

      In fact, it’s the entire reason Title Insurance was invented.

  7. Scuba Steve says:

    Grand theft home should be punishable by at least 10 years in prison.

  8. johnva says:

    @pegr: That’s a good question. It would seem that if it’s fraudulent, the criminal, the bank that made the new loan, and/or the new buyer should all be SOL. If even a fraudulent signature can change the true ownership of a house, that’s just bizarre.

  9. lemur says:

    @pegr: It seems to me you would still own the house, but I’m sure life is stressful during the time the legal system is determining that you still own it.

    But regarding protection: is there not something more practical that can be done than having to make periodic trips to check the deed? With paperless statements and so on, it seems to me that checking incoming mail is not enough.

    When someone asks for mail forwarding, the post office sends a letter to the old and new addresses. Wouldn’t the clerks be able to do something similar: send a letter to the address of the deed (or another address that was recored for this purpose the last time the deed changed hands)? Of course this is still not foolproof because someone can mess with your mail. Another possibility would be to have an automated system place a call to a number on record. My dentist’s office does that to remind us of our appointments. Intercepting the call would be harder than intercepting the mail.

    Or maybe they could start accepting PGP (gpg) keys to lock deeds. Oops… there I go dreaming again.

  10. johnva says:

    @lemur: Or hey, maybe the legal system could actually use some other effective measures to authenticate people involved in these big transactions. Perhaps they should use biometrics to determine that the person transferring a deed is really the same person that owns it. And they could run the “buyer”‘s data through an FBI database or two to screen for known criminals. Sadly, if stuff like this becomes more prevalent, we might have to resort to full background checks.

  11. Daniel-Bham says:

    @johnva: The legal system isn’t involved beyond processing and filing what is handed to them – and dealing with anything that results from such. The purchase, etc. is handled by banks and individuals – people who have no business going through your background beyond a credit check.

    I work for a Title Insurance company so we would foot the bill if something like this occurred.

  12. lemur says:

    @johnva: I put PGP keys in the same general category as biometrics. For sure, PGP keys are harder to manage than biometrics. (You can lose a key: losing an eye is possible but not as likely.) However, I think that a key protects your privacy better and also has the advantage of being revocable if there is a security breach. You can revoke an infinite number of keys. Most of us have two eyes, ten fingers, etc. but there’s a limit to how many revocations can be performed on body parts serving as security keys. I see keys as being more flexible in general.

  13. pegr says:

    @lemur: But almost all encryption failures are not related to the encryption algorithm itself, but to key handling. It would be difficult to mishandle a retina, but PGP keys are on disk media with the access password written down somewhere…

    Of course, significant headway into eliminating this problem could be accomplished by checking ID and signatures…

  14. ltlbbynthn says:

    Don’t homebuyers usually look at a house before buying it? How could thieves sell the house without the owners knowing about it, assuming they are living in the house?

  15. RGISMYFAVORITECANADIANMORMON says:

    Way to give people ideas, Consumerist.

  16. sirwired says:

    Some here have asked how exactly this scam works, given that people live in their houses, making a fraudulent retail Real Estate transaction a bit tricky to implement.

    Most instances of these scams happen when a house is empty. (i.e. Joe and Jill have put off selling Mom’s house after she died) The property is taken via a fraudulent deed transfer and then re-sold at leisure. (This requires a lax public records office or a shady attorney, or a lazy or corrupt Notary.) If the thief breaks in and puts new locks on the door, they are good to go looking like the real seller. The only thing missing is power and water, and that is easy enough to explain away with an empty house.

    SirWired

    As a side note, the last two times I signed a deed, nobody ever asked me for ID, including the Notary that stamped their official seal swearing they had done so. Scary.

  17. johnva says:

    @lemur: Biometrics don’t usually store your ACTUAL biometric information. Instead, they store something that is derived from your biometric info, and often combined with a separate key and hashed, etc. At least that is my understanding. So it can be designed so that it’s hard for someone to do anything with it like using it for anything besides the purpose it’s intended for. Anyway, that might not be the best solution. But it seems like the real problem here is that people responsible for recording a transaction are not doing a good job of verifying identities and authorization to do what they’re doing. Computer people have worked on this sort of thing for a long time; it’s about time that lawyers, banks, etc started using real and secure forms of authentication.

    @sirwired: That’s absolutely insane if they aren’t even checking an ID. My suggestion of a biometric or encryption-based authentication scheme was based on the assumption that the thieves were successfully passing off fake IDs to notaries or whatever. If they aren’t even checking a drivers’ license they should be sued or even go to jail, IMO.

  18. Bunklung says:

    @Daniel-Bham:

    I work for a Title Insurance company so we would foot the bill if something like this occurred.

    This is what I wanted to highlight. This blurb on Consumerist and even the FBI’s site covers a good amount of fear, but doesn’t highlight what happens to the victims…

    Title insurance pays out the noise. However, they have some of the best profit margins of the insurance industry, so I have no sympathy for them.

  19. Daniels says:

    How would the sale be legal? Wouldn’t it be the same as any other “receiving stolen goods” thing?

  20. SuperJdynamite says:

    Because of a goof in paperwork I once owned two houses (my name was put on two deeds when really it was only supposed to go on one). The error went undetected through closing. The closing company caught the error and asked if I could come in to sign some paperwork to relinquish my rights to the second house, which I did. While I was there I asked the obvious question: what would happen if I didn’t want to sign? The closing attorney said that when it went to court the judge would pretty much just make me sign or sign for me.

  21. UNSTOPPABLE says:

    This should be a reminder to everyone that nobody else is really watching out for you.