Is a paid-off mortgage a title fraud risk?

[crocheted_stache]

This is kind of a pointless article:
https://www.msn.com/en-us/money/realestate/when-i-told-the-internet-i-m-paying-off-my-2-mortgage-early-men-flooded-my-inbox-to-correct-me-they-re-wrong-and-here-s-why/ar-AA1xOMIJ

(Briefly, a woman wrote about paying off her mortgage. Many men flooded the replies with reasons that was a sub-optimal move. She gives her reasoning behind a personal choice.)

Then there's this paragraph:

A few people who emailed me said having a mortgage is beneficial in case I get a divorce, and that not having a mortgage would put me at risk of being a victim of home title fraud. That first part is not on my radar since I've been happily married for almost 20 years and plan to stay that way. That second part is partially true, although I use an identity theft protection plan that monitors for home title fraud and comes with $1 million in identity theft insurance.

Why would having no mortgage pose a greater risk for title fraud, if it does? What, if anything, should one do to guard against this threat? The identity theft insurance I've seen does not seem like a great deal, either in terms of price or coverage. Maybe I haven't looked lately or seen the best offerings.

(I'm not clear on how the mortgage is supposed to help in a divorce, but I'm also less concerned about that eventuality.)

[GilesMM]

If you have a mortgage, the bank has a lien on the deed which would get in the way of fraudsters.

[crocheted_stache]

And in the absence of a mortgage, what if anything should I be doing to guard against this kind of fraud?

[dandarc]

Sell your house and start renting while you've still got your faculties about you. Presumably while you've still got all your intellectual capability, you'd pay attention to property taxes and such and would respond with vigor if anything weird happened. Probably why life lock will throw in that kind of coverage - I'd bet it almost never happens, and even when it does they're just paying attorney's fees for relatively little work.

Paying off a 2% loan is a sub-optimal move, but I don't think possible title-fraud is a big reason for that to be the case (or at least

[GilesMM]

And in the absence of a mortgage, what if anything should I be doing to guard against this kind of fraud?

I wouldn't do anything other than the usual stuff to keep online identity secure. I guess you can check your deed online once per year to see if your name is still there.  Claim your home on Zillow so you know if it is listed for sale.

[crocheted_stache]

I found this article on the subject. I'll check if there's any notification service for my county or any opportunity to place a freeze.

https://www.kiplinger.com/article/real-estate/t048-c050-s002-how-to-protect-your-home-from-deed-theft.html

[crocheted_stache]

I wouldn't do anything other than the usual stuff to keep online identity secure. I guess you can check your deed online once per year to see if your name is still there.  Claim your home on Zillow so you know if it is listed for sale.

I try to do a better-than-average job of the "usual stuff," but post Equifax and several subsequent data breaches, I  expect that my information is out there. If there's a way through the county to freeze or notify or something like that to act as a circuit breaker, I'll sign up.

[Freedomin5]

We paid off our mortgage but was advised by the bank not to formally discharge the mortgage. That way, if there is title fraud, the bank still holds an outstanding loan against the property, and theoretically we would be notified because the bank would need us to come in to sign paperwork.

[crocheted_stache]

We paid off our mortgage but was advised by the bank not to formally discharge the mortgage. That way, if there is title fraud, the bank still holds an outstanding loan against the property, and theoretically we would be notified because the bank would need us to come in to sign paperwork.

I don't know if the lender where my loan ended up is that sophisticated. I certainly wasn't impressed with the rest of their business. (That, as much as the money/obligation, inspired me to pay off early.) I guess I'll check if there's anything left of them on my title when I look in on it tomorrow.

[Freedomin5]

We paid off our mortgage but was advised by the bank not to formally discharge the mortgage. That way, if there is title fraud, the bank still holds an outstanding loan against the property, and theoretically we would be notified because the bank would need us to come in to sign paperwork.

I don't know if the lender where my loan ended up is that sophisticated. I certainly wasn't impressed with the rest of their business. (That, as much as the money/obligation, inspired me to pay off early.) I guess I'll check if there's anything left of them on my title when I look in on it tomorrow.

Good luck. Our property is in Canada -- supposedly things are more tightly regulated here.

[corgiegirl]

My understanding is that title fraud is much less of a risk if you are living in the property - the starting point for that type of fraud can be checking a neighbourhood for properties that are empty/abandoned and where any post to the property can easily be intercepted.

If you do have a second home or a vacant property the first thing to do is to make sure that any correspondence about it comes directly to you and can't be intercepted.

Then make sure that your property details are up to date in your local land registry, and if possible sign up for an alert for any proposed changes to the register, again making sure that the alert goes directly to your current address.

[crocheted_stache]

I dug around on the county's website yesterday. It has the beginnings of a mechanism to make an account to pay my property taxes, but not much more than that. If there's even a way to associate my online account with my property, I can't find it. I still get to look up my own address twice a year, which works okay but doesn't seem very sophisticated.

There doesn't seem to be anything stopping me from paying property taxes for someone else, but I guess the only time anyone would want to pay someone else's taxes are, say, if they're taking care of a loved one. I don't see how leaving that option open would be a security risk.

I hope my owner-occupied residence remains an obscure and unattractive target, and that they'd send paper mail that would get my attention if someone were to start some unauthorized change. I suppose I could ask my dad how the property taxes are handled on a rental property he owns in a different county, and whether he'd expect to see notices related to it with time enough to react.

[dragoncar]

And in the absence of a mortgage, what if anything should I be doing to guard against this kind of fraud?

I’ll record a lien against your house if you like!

[crocheted_stache]

And in the absence of a mortgage, what if anything should I be doing to guard against this kind of fraud?

I’ll record a lien against your house if you like!

Thank you for your generous offer :-P

I entertained the idea of asking a contractor I know and trust to claim I owed a few hundred bucks and put a mechanic's lien on me, but that sort of thing runs the risk of backfiring in some unexpected way. I don't know if there are debt collectors that hang out at the county offices looking for things to do, if news of the unpaid debt would find its way back to my credit report, or the county gets involved in nagging or penalizing those who dawdle or figure their estate can pay when they're gone. It's possible that a scammer who knew the system better than I, would decide that clearing the title quietly was worth a small payment up front to make off with a nice, expensive house title. And if whether I or the contractor dies first, it's a hassle and probably an expense for the survivors to sort out.

Anyway, I certainly wouldn't go that route without understanding the real consequences.

I'd much rather the county set things up so property owners get notified, with some way to confirm or contest, and everyone gets that protection; not just me.

[bacchi]

And in the absence of a mortgage, what if anything should I be doing to guard against this kind of fraud?

I’ll record a lien against your house if you like!

Thank you for your generous offer :-P

I entertained the idea of asking a contractor I know and trust to claim I owed a few hundred bucks and put a mechanic's lien on me, but that sort of thing runs the risk of backfiring in some unexpected way. I don't know if there are debt collectors that hang out at the county offices looking for things to do, if news of the unpaid debt would find its way back to my credit report, or the county gets involved in nagging or penalizing those who dawdle or figure their estate can pay when they're gone. It's possible that a scammer who knew the system better than I, would decide that clearing the title quietly was worth a small payment up front to make off with a nice, expensive house title. And if whether I or the contractor dies first, it's a hassle and probably an expense for the survivors to sort out.

Anyway, I certainly wouldn't go that route without understanding the real consequences.

I'd much rather the county set things up so property owners get notified, with some way to confirm or contest, and everyone gets that protection; not just me.

1) Form LLC as a pass through entity.
2) Have LLC put a lien on your property.
3) Profit.

If someone pays off the lien, the LLC (you) would find out. When you go to sell, the lien is void or trivial to fix, as any payment to the LLC comes back to you or your estate.

[forummm]

How can they steal your deed without going through a closing attorney or escrow service? Any house I've purchased/sold (2 states) requires photo ID and a professional handling the transaction to register/record it.

[Paul der Krake]

Same energy as those people who claim you need an RFID-blocking wallet to stop the hackers.

We live in a society. The odds of someone successfully stealing a home from someone who lives there and opens their mail more than once a year rounds to zero.

[Dicey]

Same energy as those people who claim you need an RFID-blocking wallet to stop the hackers.

We live in a society. The odds of someone successfully stealing a home from someone who lives there and opens their mail more than once a year rounds to zero.

Not in the good ol' US of A. It's happening shamefully often here.

[Morning Glory]

My county set up a fraud alert website for owners to be notified of any title activity.  It's opt in but at least it indicates they are aware this stuff happens and are trying to prevent it.

[forummm]

My county also has an email alert system for any actions relating to your title (a lien, etc) so I signed up for it. But it's hard to imagine how anyone could actually steal a house that I live in. Even if someone, somehow, got duped into buying it (without seeing inside it), and found an escrow agent that would be duped into thinking I was signing it away, I have possession and documentation it's mine. And there wouldn't be any evidence I benefitted from the proceeds of the sale. Etc. It could be a hassle, if it theoretically got that far. But hard to imagine.

[Paul der Krake]

I maintain that no county in the United States is going to physically kick out someone from their house and hand it over to someone else when there are years and years of dispositive evidence of ownership.

When it becomes evident that someone is attempting shenanigans, what do we think is going to happen?

One this one hand we have this property owner with dozens of neighbors who can attest they've been living here for years, has made dozens and dozens of local utility payments, is named on property tax bills going back years, whose kids graduated from the high school 10 blocks away. On the other hand this guy or LLC who is mysteriously unable appear the local judge who's in charge of resolving property disputes.

Like I said, we live in a society. Society screws up transfers of ownership all the damn time. The longer the fraud goes on for the harder it is to overturn (this is why adults open their mail), but there's no such thing as an irreversible transfer.

[GilesMM]

It is more common fraud with raw land or involving elderly people.  It can be undone by the county with not a lot of effort.

[stoaX]

And in the absence of a mortgage, what if anything should I be doing to guard against this kind of fraud?

I wouldn't do anything other than the usual stuff to keep online identity secure. I guess you can check your deed online once per year to see if your name is still there.  Claim your home on Zillow so you know if it is listed for sale.

Claiming my home on Zillow seems like an easy thing to do. I can't think of any downside to doing it.

Also, it seems like articles about title fraud and protection against it were popular a few years ago. I haven't heard anything about it lately.

[GuitarStv]

I maintain that no county in the United States is going to physically kick out someone from their house and hand it over to someone else when there are years and years of dispositive evidence of ownership.

When it becomes evident that someone is attempting shenanigans, what do we think is going to happen?

One this one hand we have this property owner with dozens of neighbors who can attest they've been living here for years, has made dozens and dozens of local utility payments, is named on property tax bills going back years, whose kids graduated from the high school 10 blocks away. On the other hand this guy or LLC who is mysteriously unable appear the local judge who's in charge of resolving property disputes.

Like I said, we live in a society. Society screws up transfers of ownership all the damn time. The longer the fraud goes on for the harder it is to overturn (this is why adults open their mail), but there's no such thing as an irreversible transfer.

This sounds like a pretty reasonable take, and is certainly what I hope would happen.

[thedigitalone]

How about adding a HELOC on the property?  The credit union/bank will put a lein on the title, just don't use it.

[Swish]

We paid off our mortgage but was advised by the bank not to formally discharge the mortgage. That way, if there is title fraud, the bank still holds an outstanding loan against the property, and theoretically we would be notified because the bank would need us to come in to sign paperwork.

I don't know if the lender where my loan ended up is that sophisticated. I certainly wasn't impressed with the rest of their business. (That, as much as the money/obligation, inspired me to pay off early.) I guess I'll check if there's anything left of them on my title when I look in on it tomorrow.

Good luck. Our property is in Canada -- supposedly things are more tightly regulated here.

Toronto had 2 cases in the last year one where the house was fully sold and funds advanced. Saskatoon had a case with a mix of title and mortgage fraud concerning 17 properties.

Best defense in Canada is a small loan against property and title insurance which will cover up to $1M for the time you own the property.

[caracarn]

We just bought a home with no mortgage so had this exact scenario, how do we avoid a problem.  Our county did have a notification service.  As simple as entering your name e-mail and then any transactions that occur against your name get a ping to that e-mail.

[JAYSLOL]

And in the absence of a mortgage, what if anything should I be doing to guard against this kind of fraud?

I’ll record a lien against your house if you like!

I’ve heard that opening a HELOC (even if not actually borrowing from it) can create an extra protection from title fraud, any attempt at change of ownership will flag the bank who should contact you and hold things up a bit

[obstinate]

Toronto had 2 cases in the last year one where the house was fully sold and funds advanced. Saskatoon had a case with a mix of title and mortgage fraud concerning 17 properties.

That is a problem for the buyer, the bank, and the title insurance company, but not for the actual owner of the house.

For the record there are approximately 1.2M dwellings in Toronto, so this puts your odds of victimization around 1/500k, assuming uniform likelihoods.

[Villanelle]

I feel like I'm missing something.

If someone breaks into my home and steals my TV, then sells it to a 3rd party and the police track it down, I get my TV back, as long as I can prove it was my TV.  Offering my receipt that shows the serial number#, for example, would prove pretty definitively that this was mine, and that plus the police report and the photos of my broken front door and the missing TV would leave little room for doubt.  It's that 3rd party that's screwed, not me.

Similarly, if someone tries to claim my home, or manages to get someone else to buy it by claiming they are the owners, I just need to prove it's my house.  The fact that I have lived here, received mail here, paid multiple utility bills with this address, registered to vote here, have neighbors who will report me living here, and 2 RE agents who would say they were part of the transaction of me buying it, have mortgage records up until it was paid off, have contractor receipts for work performed, paid state taxes from this address, paid property taxes here, and probably many other things, would create a pretty compelling case in a he-said, she-said argument about who owns the house.  The other party would have... none or almost none of those things.

It would be stressful and a PITA, but this is about 87 turtles deep on things I'm going to worry about, and on the very off chance it happens, I think there is almost no chance it doesn't eventually settle in my favor. 

[Dicey]

Here's a fun twist on this topic. My BIL owned land along a popular, but still somewhat under the radar, river. He intended to build on it "someday." He got a call from a Realtor, just confirming his intent to list it. It was completely fraudulent. Fortunately,  the Realtor was doing his due diligence, so the listing never happened. A little while later, a different Realtor called with a similar question. BIL said she seemed pretty sharp, so he asked her what she thought the property was worth. She named a number that blew his mind. He told her if she could really get that from a legitimate buyer, she could sell it. And so she did. It ended up being a complete win-win.

Note: as I'm writing this, it just sounds like a clever way to get listings. However, due to the initial circumstances, BIL was sure it was the same scammers, trying to get another agent to fall for their bullshit.

[crocheted_stache]

Here's a fun twist on this topic. My BIL owned land along a popular, but still somewhat under the radar, river. He intended to build on it "someday." He got a call from a Realtor, just confirming his intent to list it. It was completely fraudulent. Fortunately,  the Realtor was doing his due diligence, so the listing never happened. A little while later, a different Realtor called with a similar question. BIL said she seemed pretty sharp, so he asked her what she thought the property was worth. She named a number that blew his mind. He told her if she could really get that from a legitimate buyer, she could sell it. And so she did. It ended up being a complete win-win.

Note: as I'm writing this, it just sounds like a clever way to get listings. However, due to the initial circumstances, BIL was sure it was the same scammers, trying to get another agent to fall for their bullshit.

I have no plans to sell the home I live in, but every so often, I get a letter from a real estate agent insisting that my house is one of only so many that meets their buyer's criteria, and how I could surely name my price and come to some agreement. Sometimes it includes a heartfelt introduction to the young, hopeful couple. I really have to wonder how many of these letters are really someone with their eye on my house and how many are just broadly fishing for leads. A few things about my house are actually a little out of the ordinary.

[obstinate]

They're all just fishing for leads. One hundred percent of them.

[Dicey]

They're all just fishing for leads. One hundred percent of them.

You are entitled to your opinion. There is a huge difference between fishing for leads and trying to defraud people of what is rightfully theirs.

As for me, I had two excellent Realtors who set me on the path to FIRE. In general, they fish because it works.

[obstinate]

You are entitled to your opinion. There is a huge difference between fishing for leads and trying to defraud people of what is rightfully theirs.

As for me, I had two excellent Realtors who set me on the path to FIRE. In general, they fish because it works.

I'm referring to the type of realtors who cold-call/text/email that they "have a buyer" for your unlisted property. I.e. the scenario from the comment I was responding to. I'm not talking about realtors in general. We are using a realtor to sell our house right now and she has delivered significant value.

[Dicey]

You are entitled to your opinion. There is a huge difference between fishing for leads and trying to defraud people of what is rightfully theirs.

As for me, I had two excellent Realtors who set me on the path to FIRE. In general, they fish because it works.

I'm referring to the type of realtors who cold-call/text/email that they "have a buyer" for your unlisted property. I.e. the scenario from the comment I was responding to. I'm not talking about realtors in general. We are using a realtor to sell our house right now and she has delivered significant value.

Thanks for the clarification.  We own multiple houses, so we get that crap all the time. If I happen to pick up the phone, I ask them if they have any property I can buy for below market value. Click.

[dragoncar]

  We own multiple houses, so we get that crap all the time. If I happen to pick up the phone, I ask them if they have any property I can buy for below market value. Click.