Flagging Fraud (Part I): Know These Indicators of Transaction Fraud
Every year the U.S. government comes out with a growing list of warnings on cyber fraud, real estate fraud, email fraud – the list goes on.
Some warnings are common sense: delete suspicious-looking emails, don’t give away banking information or social security numbers, never wire anyone money without triple checking – and then checking again.
We’re committed to ensuring that all independent agents have every new (and standard) information source available, even as the rules and the threats multiply and expand almost every month.
In this first installment of a multi-part series on Flagging Fraud, we take a look at some of the red flags involving parties to a real estate transaction.
Learn or at least become familiar with red flags that could well indicate something is awry in any real estate transaction.
Some title fraud may be detected by agents before the transaction closes.
Rather than memorize, regularly reviewing this list will help you and all those involved in your transactions be aware of potential fraudulent components:
- Releases of prior mortgages recorded before or independently of the closing of a new loan with no source of payoff funds.
- Many recent transactions and/or re-recordings.
- Recent change in title, especially one without concurrent financing.
- Releases recorded out of sequence.
- Sale of property subsequent to or concurrent with a divorce.
- Quitclaim deeds with no consideration.
- “Intra-family” deeds.
- Parties to the transaction are affiliated.
- Document not prepared by an attorney or title company.
- Document looks non-standard.
- Power of attorney with Grantee signing as Attorney-in-Fact.
- Prior signatures indicate failing health or physical deterioration followed by a healthy, strong signature.
- Bargain purchases—policy amount much higher than purchase price.
- New mortgage amount much higher than purchase price.
- Property seller is an LLC/entity/corporation.
- Appraisal looks questionable (e.g. indicates recent sale/listing activity at significantly lower price; comparable sales are previously flipped properties).