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Fraud & Forgery Amidst Claims

Be mindful of the potential hazards with an increasingly online-only landscape

As news continues to break, it becomes more and more apparent that the COVID-19 pandemic will have a lasting effect on our industry. While it’s critical that we learn to adapt amidst the crisis, it’s also imperative that we be mindful of the potential hazards that can come with shifting into an increasingly online-only landscape. Here are some of the things to watch out for as we navigate through this difficult time.

Increase in Wire Fraud and Phishing

There is no way to avoid electronic communications throughout this pandemic. Be vigilant against phishing emails, incorrect email addresses, slightly off signature blocks and dated lingo, and emails coming in at odd hours (implying the fraudster may be abroad). Always call a verified telephone number to confirm changes to wire instructions. Click on this link for more information on what to watch out for. 

TIP: Have a plan in place – meet with your IT department, and talk to your insurance agent to see how you can protect yourself against these scams.

Fraud & Forgery

Unfortunately, tumultuous times often only embolden fraudsters further. That’s why it’s important now, more than ever, to treat remote closings with the same care and caution as mail-away closings. Here are some red flags common to fraud and forgery claims: (1) the property is a part of a “flip” transaction; (2) the property is vacant land; (3) the deed to the seller is a recently recorded quit claim deed. Click on this link for more red flags.

Powers of Attorney

Powers of Attorney (POA) are ripe for fraud. Carefully examine the powers that are granted in any POA, and confirm that the POA was given freely and purposefully for the intent for which it will be used. Require a fresh POA if the POA presented is more than six months old. If you have reason to question the capacity of the principal, or have questions about the validity of the POA, contact your local Alliant National underwriter for approval before proceeding.

TIP: If your state allows the use of remote online notarization (RON) technology and the county recorder will accept electronically signed instruments for recording, recommend using RON so the principal can sign the required documents instead of appointing an attorney-in-fact. 

Undue Influence and Duress on the Elderly

With COVID-19 threatening the elderly more than any other demographic, we have a responsibility to ensure we’re mindful of any potential undue influence or duress from unscrupulous heirs or caregivers. If the person holding title is elderly or is sick, be sure to dig in further before agreeing to conduct the closing. 

Hard Money Lenders

Hard money lenders aren’t regulated by state or federal law. Generally, hard money lenders do not collect loan applications or otherwise vet their borrowers. This practice creates a higher potential for fraud by third parties posing as legitimate borrowers. If something feels off, it probably is. For more information on what to look for with these transactions, click on this link.

Note: Seller-financed purchased money loans are not considered hard money lenders.

Crime Watch Program We take the safety of our clientele very seriously. Because of that, Alliant National offers a $1000 reward to any agent who helps identify and prevent a forgery or scam. Be sure to contact the hotline to report anything that may feel like fraudulent activity. To submit a claim for a reward, click here:  https://alliantnational.com/title-claims/crime-watch-program/.

Kamilah Brennan

Alliant National announces internship program, introduces first intern Kamilah Brennen

The claims and Florida underwriting departments have collaborated to create a paid internship program at Alliant National.

The internship program was created to foster greater awareness and interest in our unique industry, by engaging with students at local law schools.

The program kicked into gear last March, with the selection of the program’s first intern, Kamilah Brennen. Kamilah attended George Washington University for her undergraduate studies and is currently attending Florida A&M University College of Law. She is in the Top 5 percent of her class and graded onto the Law Review.

In her downtime, Kamilah enjoys playing softball, basketball, and mountain biking. She also enjoys reading and watching sci-fi books and movies.

Kamilah will be working at our Oviedo office and will have the opportunity to shadow the underwriting and claims teams, and observe other departments’ functions.

We interviewed several applicants at local law schools, and Kamilah stood out to us as a very caring and bright applicant. We are very excited to have Kamilah with us!

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Obtaining Payoff Statements Directly from the Lender

Looking to avoid title claims related to unpaid mortgages and deeds of trust? We offer 4 tips

Our Claims Team has received various claims related to unpaid mortgages and deeds of trust. Here are two scenarios we have seen arise in the context of a claim:

Scenario One

The agent receives a payoff statement from the seller. The seller sends an email requesting the payoff from the lender and copies the agent on the email.

The agent relies on the email and the payoff statement to wire funds to the lender.

Later, it is discovered that the email address for the lender is fake, and the bank account receiving the payment was held by the seller, not the lender.

Scenario Two

The agent reaches out to the lender for a payoff statement. However, the closing date is approaching, and the lender has not responded.

The seller provides the agent with a printout showing a zero-balance owed on the account. The agent contacts the lender once again for a payoff statement.

The lender confirms over the phone that a zero balance is owed. The agent closes the transaction based on these representations.

Later, it is determined the original lender confirmed a zero-balance due because the loan had been sold to another lender.

An assignment of the mortgage had been recorded, and the current holder of the notes filed to foreclose.

Here are 4 tips to help you avoid these types of claims:

  1. Always obtain a payoff statement directly from the lender. Do not rely on payoff statements provided by other parties. Your request for a payoff should include a letter of authorization from the borrower, the loan number, the property address, the borrower’s name and your fax number or email address.
  2. Only rely on a payoff statement sent by the current holder of the note. Check the MERS system, (if the mortgage is a MERS loan), and the public records for the last assignee.
  3. Be mindful of working with hard money lenders – hard money lenders may assign their interests off the record. (See Bulletin 2017-02 and Claims Title Tip dated September 18, 2017 discussing hard money lenders .)
  4. Obtain separate payoff statements directly from each lender with an interest in the property being sold or refinanced. Do not rely on representations from the borrower or other institutions regarding the balance of a loan.
ronald mcdonald house

Claims team delivers taco night to Ronald McDonald families in need

The Claims Department recently paired up with the Ronald McDonald House Charities as part of their annual campaign to give back.

Ronald McDonald House Charities provides support to children and their families at hospitals worldwide by providing a place to stay, and home-cooked meals, at little or no cost.

This service allows families to focus on the health and healing of their child, instead of having to worry about groceries, shopping, cleaning and cooking.

The Claims Team paid a visit to the Ronald McDonald house in Orlando and prepared a home cooked meal of tacos with all the fixins.

Claims Stories: A Naked Release Should Trigger a Red Flag

In our continued effort to keep our agents and escrow officers apprised of trends in the Title industry, our claims counsels and administrators have provided the following claim summaries. It is our goal to share these stories and help you avoid similar scenarios in the future. In this article, we will focus on Naked Releases.

A naked release is a release of a lien or mortgage that is not done in connection with a sale or refinance transaction. These releases are a red flag and merit further investigation. Naked releases often involve forgery which are expensive to resolve and cause significant losses.

Here’s how it played out:

This blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on this blog.

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