The Ramblings of a Title Man

???????????“Title Fraud Services and their Ilk”

?You may have seen them. Your customers may have asked you about them. They are the flashy commercials online and on TV that offer to protect your home, your title, from would be fraudsters who move the title to your home into their name and take out fraudulent loans against the property. I am specifically not mentioning any of these companies by name, but if you do a simple Google search, you can find them.?

?An agent last week posed the question to me: “What should consumers really know about these companies? Are they legit?”

?First and foremost, they are “legit.” They use national databases and free services from various recorders of deeds offices to monitor the title to your home. You pay them a monthly fee, and they put an alert on your home title very similar to putting an alert in Google. If something gets recorded that purports to affect your title, they get the notice and they notify you of the danger. However, what most people do not know is many records offices in local counties offer this service for free. You can request it directly from the records office.?The records office then sends you an email to let you know if anything has been recorded effecting your property.

?Not all counties have this service. For the counties that do offer it, title professionals could be taking the affirmative step to help consumers register for this free service. Moreover, many of these companies offer to help with mitigation should a title fraud occurrence happen. It is critical to know that this is not cyber fraud protection. It does not come with a financial guarantee behind it. It is only to help mitigate the potential fraud by helping you file the necessary affidavit that fraud has occurred.?

While conducting my research of the companies that offer this service for a fee, I found a troubling statement on one of the company’s websites: “Your title is uninsured going forward and you will have to use your own money to defend against any criminal attack.” As we know in the title business, this is not true, if a consumer purchased the ALTA Homeowner’s Policy of Title Insurance. The ALTA 2021 Homeowner’s Policy has both pre- and post-date of policy protections for forgery and impersonation. Covered risk number 3 states: “Someone else claims to have a right affecting Your Title because of forgery or impersonation.” When paired with covered risk number 5, which says: “Any of Covered Risks 1 through 4 occurring after the Date of Policy,” the policy covers the homeowner for someone forging their name to title documents after the date of the policy. This protection is for the life of the consumer. It only expires when the property is sold and the consumer no longer has an interest in the property.?

?Title professionals need to do a good job explaining to consumers the post-date of policy protections the ALTA Homeowner’s Policy offers. The most cited example on some of the title fraud service company websites describes a fraud where the criminal signs a new home equity loan in the owner’s name and takes off with the cash, leaving the homeowner to dispute the loan as a forgery. Remember, forgery is covered, and this scenario would be covered by The ALTA Homeowner’s Policy of Title Insurance.?

?If I was working with consumers directly today, at closing I would be making sure I did three things:

• Explain the protections and coverage of an ALTA Homeowner’s Policy of Title Insurance;
• Explain that you can set an alert to protect your home with the local records office, and get notified if someone tries to fraudulently file something on your property’s title; and
• Explain that the consumer will likely be contacted by companies offering title fraud monitoring services, and that service may be redundant and not necessary.?

?When I owned a title agency in the 1990s, I required all closing officers to explain the title insurance coverage and “mark up” the title commitment for the new homebuyer. Today, I would add the three points above, making sure the consumer was aware of the forgery and impersonation coverage in the ALTA Homeowner’s Policy of Title Insurance.