As part of its mission to provide valuable help to title industry stakeholders, Alliant National has launched a program incentivizing agencies to report any suspected instances of fraud. Firms that do so are eligible to receive a $1,000 reward.
Since its inception, the program has proven to be a model for how underwriters and agencies can work together to prevent financial malfeasance within the industry and help lower premiums. In the past year alone, Alliant National and its agents have successfully averted over $1.8 million in liability costs.
Those results carried over into 2023 with yet another successful example of how fraud can be effectively detected and prevented when different stakeholders work together proactively and in tandem. Marion Lake Sumter Title, an agency based out of Ocala, Fla., recently noticed a potentially fraudulent transaction regarding a roughly half acre plot of vacant land valued at $20,000. As per the agency’s protocol, Marion Lake contacted the seller about the sale and instructed them to call their office if anything was amiss and if they were not, in fact, selling the property. The agency’s suspicions turned out to be correct, as the owner called back immediately, provided two valid forms of photographic identification and scheduled a video conference call to discuss the matter. Conversely, the fraudulent seller was asked for the same items and never responded.
“As soon as we received a call from the real seller, we notified our underwriter as well as both real estate agents on the transaction,” said Heather Pierport, Manager, Licensed Escrow Agent and Post Closer at Marion Lake Sumter Title, who initially identified the suspicious transaction. When asked about why fraud detection and prevention programs are important, she said, “These types of transactions are emotionally draining and can put agents in a depressive state. Programs like Alliant National’s help keep morale up when dealing with fraudsters.”
“Heather has been instrumental in keeping our underwriting team updated on both the fraudulent seller schemes and fraudulent checks they have encountered. I wish we could clone them!” said Lisa Yates, AVP, Agent Training Manager, Fla., for Alliant National, when discussing the incident.
Lisa then addressed Marion Lake Sumter’s anti-fraud efforts more broadly: “The way they strive for attention to detail and research each order is such a benefit to customers, underwriters and the title industry as a whole. Heather and her team have the best ‘trust your gut’ reactions to questionable transactions. As fraud continues to plague our industry, it is very important to double-check transaction details to make sure they all match-up.”
For her part, Heather concurred with how important it is to catch fraud before it occurs for the larger title insurance industry, taking the time to explain how continuing education and digital solutions have also made a positive difference: “We are constantly learning about the latest fraud trends. We also use Positive Pay to catch fraudulent checks that may try to post to our escrow account. This November, for example, we had almost $90,000 in fraudulent checks try to come through our account. With Positive Pay, I rejected those items, and we never lost any funds. I truly believe that solution should be a requirement for every escrow account.”
As the country’s leading independent title insurance underwriter for the independent title agent, Alliant National has a responsibility to help confront the growing threat of fraud in our industry. One way we do this is through our Crime Watch program, which incentivizes agencies to report instances of fraud that they encounter. As part of the program, firms that prevent a fraudulent transaction that was to be insured by Alliant National may be eligible to receive a reward of $1,000.
Coffelt Title – An Active Partner In Fraud Detection
Coffelt Land Title, Inc., a title insurance agency that does business throughout Missouri and Kansas, recently detected three instances of fraud, and submitted them to Alliant National for award consideration.
Jessica Wackerman, who works at Coffelt as a title searcher and examiner, noticed a potentially fraudulent transaction while examining a series of files on three properties involving one buyer. “Looking at all of them together, I noticed some issues with the deeds as far as the same formatting, the spelling of grantor and grantee names, as well as notary names,” she said. “I then did some digging and found lots of issues – such as finding death information on one individual.” After noticing this and collecting the requisite information, she quickly notified her contact at Alliant National and sent in copies of the deeds and commitments.
Taken together, these various properties represented a potential fraud amount of nearly $20,000, pointing to the importance of vigilance when it comes to detecting and reporting fraud. As Jessica explains: “Alliant National’s Crime Watch program is a great thing for the agents and underwriter. It protects everyone, but it also ensures that the agents are looking into anything that might seem a little suspicious. The incentive is a nice reward for doing the research to produce all the information.”
Of course, no single program can entirely prevent or mitigate a problem as endemic as real estate fraud, which is why agencies must take other steps to protect themselves and the customers they serve. Coffelt Title itself has taken that idea to heart, investing in staff training and education to help employees catch fraud before it is too late.
Alliant National Is Making A Difference In Fraud Prevention
“I think all title companies need to be more aware of the fraud that is happening in their markets. They should not act under the assumption that it won’t happen to them or their customers,” said Jessica when asked about fraud in the title industry.
We couldn’t agree more, which is why Alliant National launched the Crime Watch program in the first place. Over the past year, we have seen the program pay off in spades. In 2022, Alliant National agents, through this program, collectively reported to us 12 instances of attempted fraud, totaling a potential liability amount of $1.8 million. In recognition of these agent sleuths, we have issued $12,000 in awards. We’re proud of our agents’ efforts to combat this systemic problem in the industry and, as this year draws to a close, would like to thank the following Crime Watch award recipients for making title insurance a safer and more sustainable field:
Siesta Title Escrow and Services LLC | FL | Amanda Pertuch
Title Professionals of Florida (TPF) | FL | David D. Lanaux
Alliance Nationwide Title Agency, LLC | MO | Daniel Onwiler
Alliance Nationwide Title Agency, LLC | KS | Ben Chapman
Siesta Title Escrow and Services LLC | FL | Claire Hooper
Coastal Title Services | FL | Brianna Steel
Legacy Title & Escrow, LLC | FL | Kathy Morgan
Caldwell County Abstract and Title Company, LLC | MO | Megan Eitel and Amanda McGinley
Whether your customer has owned property for years or just purchased property, you know these property owners are not immune from being a potential victim of real property fraud. With the use of technology and access to real property records, property owners are reporting a number of fraud cases. One type of fraud being reported involves foreign property owners. The typical target owns an unencumbered, vacant parcel of land and has an out-of-country mailing address listed in the county records. Fraudsters are most likely finding these properties by searching the county records to identify a potential victim.
Here’s one recent fraud scenario: Months after a sales transaction closed, the title company was advised by the insured of a potential fraudulent sale of a vacant parcel of land which was owned by a foreign investor. An investigation revealed that the sale of the property was fraudulent. The conveyance deed was allegedly notarized by a notary employed at the U.S. Consulate General office in Johannesburg, South Africa. The Consulate General’s office confirmed that there was no notary by that name employed at their office. The owner of the property, who resided in Columbia, confirmed that the property was not for sale.
A few Red Flags we have identified while administering these types of claims include:
Vacant land sales;
Vacant parcels that have been owned by the same owner for several years;
Non-local owners;
Low sales price; or
Real estate agent is contacted by a buyer/seller in a rush to buy/sell the property.
Some tips to help a title company avoid this type of fraud:
Be extremely careful with emails from out-of-country sellers rushing to close the transaction;
If you receive a rush sale request from the purported seller or a real estate agent, DO NOT rush; rather take your time and give the file your full attention;
Ask the real estate agent how or from whom they received the sale listing;
Contact the prospect seller via Zoom, Skype or another video-enabled meeting platform;
Ask the seller questions about the property such as when and how they came to acquire it, and what their plans were for the vacant parcel to see if the seller knows the property’s history;
Request to see the identification that will be used at the closing transaction;
Check the seller’s foreign identification. Look at the picture (sometimes you can see that a picture was placed on top of another picture), and check for inconsistencies with the font and signs of tampering. Whenever possible, compare to a standard version of the identification, whether using a guidebook, an online resource, or even Googling samples of identification for comparison;
Check the property appraiser’s website for the current owner’s address, and consider forwarding a letter to that address;
Check the tax collector’s website, and review the history of tax payments to see if you can determine who the payor has been, and their mailing address;
Research the notary and contact the Embassy or Consulate to confirm the notary works there. We have learned that many of the foreign officers are aware of this type of fraud; and
If your gut tells you something is wrong, please follow your gut. That feeling is usually right!
For our agents, remember that you can be rewarded for your efforts through Alliant National’s Crime Watch Program if you prevent a fraudulent transaction from closing. Program details and the nomination form are on our website at alliantnational.com/title-claims/crime-watch-program/.
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.
Alliant National’s Crime Watch Program creates a formidable partnership to fight fraud.
There is no other way to say it: Real estate fraud is a major problem in the United States. According to the National Association of Realtors, nearly 14,000 people were victimized by real estate fraud in 2020 alone.[i] Combatting this growing threat requires strong partnerships, and Alliant National’s Crime Watch Program seeks to foster such partnerships by rewarding Alliant National agents who prevent fraudulent closings.
The program has produced real results over the years. In this blog, we will look at a recent detection and prevention of a fraudulent transaction by Siesta Title and Escrow Services LLC.
Alliant National Agents on Crime Watch
Alliant National offers a $1,000 reward to Alliant National agents who help prevent a fraudulent transaction from closing. The company created the program to help raise agents’ awareness of potential fraudulent transactions and to reduce the overall cost of claims.
To qualify for consideration to receive a reward under the Crime Watch Program, an agent must satisfy a few requirements:
The reporting agent must be an active Alliant National agent in good standing.
The agents must prevent a fraudulent transaction or forgery involving a real estate transaction that was intended to be insured by Alliant National.
In the case of forgery, the intended forgery must include the falsification of a signature with an intent to defraud.
The Crime Watch Nomination form must be executed by an owner/manager.
All available and relevant documentation – including evidence showing that the transaction was to have been insured by Alliant National – must be submitted to the appropriate Alliant National State or Regional Agency Manager along with the Award Nomination form.
The submission form and all relevant documentation will be reviewed by the company and a final determination will be made.
Siesta Title Spots Suspicious Activity
Siesta Title and Escrow Services LLC, a title agency headquartered in Port Charlotte, Fla., recently submitted a suspected fraud to Alliant National. Their story underscores the importance of Alliant National’s Crime Watch Program and how collaboration between agents and underwriters can help stop fraud.
The property in question was a vacant lot in Port Charlotte that had been owned by a Canadian man for 30 years. Quite quickly there were communication problems and other warning signs that something about the transaction was amiss.
“The seller was hard to reach from the beginning, did not respond to emails and only called once, but it was a horrible connection,” said Amanda Pertuch, the submitting agent.
Some of the other indicators that tipped Amanda off to the questionable nature of the transaction included:
The purported seller having suspicious-looking ID
The purported seller’s wiring instructions going to a foreign bank
The purported seller’s letterhead having an address associated with a vacant lot
The purported seller not having a bank account in the same country where he holds citizenship
The notary on the closing documents was already on Siesta’s fraud alert list
The purported seller not showing up in any Google searches
Following verification by Amanda’s manager and Alliant National, the suspected fraud was confirmed, and the transaction was cancelled. The proposed liability amount for the transaction was $160,000.
“I’m glad and relieved that we were able to catch this fraud attempt,” said Pertuch. “Anti-fraud programs are important for our industry to keep claim costs under control. I’m happy Alliant National and Siesta Title were able to take care of this quickly and efficiently.”
If you suspect fraud, notify your manager immediately. Your manager may investigate further and will determine next steps. Under no circumstance should suspicions be communicated to outside parties without prior approval from your manager.
Fraudsters will often attempt to speed the transaction along; do not let them succeed. If you suspect fraud or forgery, conduct a full investigation before proceeding to close the transaction and issuing the policy.
Managers should contact Alliant National underwriting or claims for further assistance.
Working Together, We Can Limit Fraud
Alliant National is committed to limiting fraud and lowering claim costs. However, we can’t do it alone. Just as our ability to deliver high-quality title insurance hinges on our partnerships with agents, so too does our capability to detect and thwart fraud. And as Siesta Title and Escrow Services’ work shows, when those partnerships work, real results that reward agents and protect transactions are indeed possible.
The FBI’s Internet Crime Complaint Center (IC3) 2021 report released in March highlighted an “unprecedented increase in cyberattacks and malicious cyber activity” resulting in a dramatic escalation in financial losses.
In 2021, IC3 received 847,376 complaints from consumers and businesses – a 7% increase from 2020 – with potential losses exceeding $6.9 billion. Most significantly for the title insurance industry, business email compromise (BEC) schemes resulted in losses of nearly $2.4 billion, up 33% from 2020.
In its report, the IC3 identified Russia as a hot spot for cyberattack actors in 2021. In recent weeks, the risk of those cyberattacks has grown exponentially in retaliation for the many sanctions imposed on Russia following its invasion of Ukraine on Feb. 24.
On March 21, President Biden released a statement highlighting the imminent threat to our nation’s cybersecurity. That same day, Deputy National Security Advisor Anne Neuberger said in a press briefing, “We’ve previously warned about the potential for Russia to conduct cyberattacks against the United States, including as a response to the unprecedented economic costs that the U.S. and allies and partners imposed in response to Russia’s further invasion of Ukraine. Today, we are reiterating those warnings, and we’re doing so based on evolving threat intelligence that the Russian government is exploring options for potential cyberattacks on critical infrastructure in the United States.”
These imminent threats are a reminder of how important it is to take the necessary steps to protect your agency and your customers.
Alliant National has just released a white paper titled Escrow Fraud/Social Engineering: Recent Schemes and Prevention Tipsto provide our agents with information, risk factors and protocols that will help you partner with consumers, real estate agents and lenders to defend against the fraudsters.
In addition, the Biden Administration released a Fact Sheet, urging companies to take immediate steps to protect their systems, including:
Mandate the use of multi-factor authentication on your systems to make it harder for attackers to get onto your system
Deploy modern security tools on your computers and devices to continuously look for and mitigate threats
Check with your cybersecurity professionals to make sure that your systems are patched and protected against all known vulnerabilities
Change passwords across your networks so that previously stolen credentials are useless to malicious actors
Back up your data and ensure you have offline backups beyond the reach of malicious actors
Run exercises and drill your emergency plans so that you are prepared to respond quickly to minimize the impact of any attack
Encrypt your data so it cannot be used if it is stolen
Educate your employees on common tactics that attackers will use over email or through websites
Encourage employees to report if their computers or phones have shown unusual behavior, such as unusual crashes or operating very slowly
Engage proactively with your local FBI field office or CISA Regional Office to establish relationships in advance of any cyber incidents
The Biden Administration also encourages IT and security leaders at all companies to visit the websites of CISA and the FBI to access technical information and other useful resources. These heightened threats represent a clear and present danger for all of us. We encourage all of our agents to download the Alliant National Escrow Fraud/Social Engineeringtoday and share this information with your staff and customers.
