Title Lock Insurance

Property fraud, mortgage fraud, and title fraud (a.k.a. house stealing) are becoming a big problem.  So-called title lock insurance came into effect because of this growing area of fraud specifically targeting the elderly, or anyone else who may have equity in their property. 

Here’s typically how the title fraud occurs:

• A fraudster does research to find a home with equity, which is the difference between the amount a property can sell for versus the remaining loan balance secured by a mortgage.
• A fraudster forges your name on a notarized “quit claim” deed, and files the document with county Recorder of Deeds Office. They may have been able to get a copy of your signature through an online public records database containing your own property deed or mortgage documents.  A notary is supposed to verify who is executing a document, so sometimes, they may too be corrupted or involved in the crime.
• The Recorder of Deeds Office, seeing a properly executed document with all the required data, must file the document. Once the fraudulent deed is recorded, the fraudster is the owner of the home…on paper.  It appears, to anyone looking in from the outside, that your home has been sold.
• The equity in your home is then used by the fraudster to take loans in your name.
• You find out the hard way…when you receive the first loan payment bill due in your name.

There are other variations of how a fraudster can take advantage of this issue, but generally, there is a document recorded at the Recorder of Deeds Office that creates the overall problem for the homeowner, whether that be a mortgage loan taken in your name, resale of your home to an unsuspecting party, or another scenario.  Regardless, the homeowner is left with a mountain of problems to clean up after the dust has settled.

There are a lot of failures that occur throughout this entire process, from the notary to the Recorder of Deeds, to the banks giving the bad loans…but what if there were a service that could provide a notice to you if they happen to see this problem begin to occur?

In this post, I wanted to review such a service called title lock insurance that has received significant media attention over the past few years to help you understand the reasons why it may be something to consider, or not consider, based upon your personal situation.

It’s important to make the distinction between what title lock insurance is and what it is not.  Title lock insurance is not insurance.  Nobody, because of having this service, is going to help you restore your property.  Additionally, unlike a credit report freeze, there is no “lock” that is ever placed on your property’s title, so the phase title lock protection can be a bit of a misnomer.  Title lock insurance is simply a notification service that exists to monitor any transaction that may occur on your property record and subsequently, not proactively, inform you of the transaction.