28% of title insurance companies experienced
at least one fraud attempt in 2023
WASHINGTON, Aug. 5, 2024
/PRNewswire/ -- According to the American Land Title Association
(ALTA), seller impersonation fraud is a growing
concern in the real estate industry. In 2023, 28% of title
insurance companies experienced at least one seller impersonation
fraud attempt, and in April
2024 alone, two in 10 title companies experienced
attempts.
Seller impersonation fraud affects both title
insurance companies and their customers. This type of
fraud occurs when fraudsters impersonate property
owners to sell property they do not own. Because fraudsters
typically target non-owner-occupied properties, it can take months
or years for the actual property owner to discover the
fraud.
However, a new study conducted by ndp | analytics noted that the
title industry is prepared. Nearly all title companies surveyed
(91%) currently provide or plan to provide education and resources
to train employees on fraud. These actions are
critical to combatting all types of fraud, including
seller impersonation fraud, wire fraud
and elder financial exploitation.
The study—which highlights responses from 783 title companies
across the United States—also showed that seller impersonation
fraud often is caught before the real estate closing
is completed. Forty-six percent of companies said identifying and
preventing fraudulent transactions before closing was at least
somewhat common, compared with 26% after closing. In 2023, 16% of
title companies that had seller impersonation fraud
attempts paid claims.
"Title insurance offers protection when seller impersonation
fraud does occur," said American Land Title
Association (ALTA) CEO Diane Tomb.
"Both the ALTA Owner's Policy and ALTA Homeowner's Policy cover
buyers who fall victim to forgery before a property purchase.
Additionally, the ALTA Homeowner's Policy protects the owner
against a third party who fraudulently transfers the property in
the future."
According to the study, in the 46 states where regulators have
approved enhanced policies, 42% of customers choose policies that
protect their property from future forgery.
Other key takeaways from ndp's research include:
- Seller impersonation fraud is a growing
problem. 28% of title insurance companies experienced at least
one seller impersonation fraud attempt in 2023; 19%
faced attempts in April 2024
alone.
- Most title insurance companies have adopted tools and
resources to fight seller impersonation fraud.
Nearly all companies currently provide or plan to provide education
and resources to train employees on fraud (91%), and
most utilize ALTA resources (69%).
- Common characteristics of seller impersonation
fraud include notarization issues and use of a
property owner's legitimate non-public personal information.
Per the study, the most common notarization issues were fake notary
credentials (43%) and use of real notary credentials without
permission (31%).
- Red flags can include vacant land transactions, requests for
use of an unknown notary and all-cash transactions. Requests
for all-cash transactions and mail-away signings using an unknown
notary carry a higher risk of fraud: 88% and 86% of
companies identified these actions, respectively, as at least
somewhat common red flags.
Contact: Megan
Hernandez
Office: 202-261-0315
Email: mhernandez@alta.org
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SOURCE American Land Title Association