Real Estate Title Fraud: How to Keep Your Property Safe
Real Estate Title Fraud: How to Avoid It
Did you know that real estate fraud happens daily? And it happens to very intelligent and savvy homeowners. In this episode, Tanner Herrick, EVP of Premiere Title, talks to us about the tactics criminals are using - from hacking email accounts to listing frauded properties for sale on Zillow.
Learn how to prevent wire fraud, deed fraud, and other sophisticated real estate scams.
Key Takeaways:
Diligence: How to be thorough in reviewing documents and communications with your title company.
Using Google Alerts: How to set up alerts for your properties to monitor suspicious activity.
Title Companies: What to look for when employing a title company for your real estate transactions.
Listen to the full podcast episode for more in-depth explanations and examples of title fraud.
Set up your Maricopa Co. title alert with the Recorder's office
Contact Info:
Time Stamps
00:17 Diving Into Title Fraud with Expert Tanner Herrick
00:47 Understanding the Basics and Prevalence of Title Fraud
01:15 The Evolution and Sophistication of Title Fraud
02:47 Real-Life Examples of Title Fraud Incidents
05:38 The Challenge of Deed Fraud and Its Impact
13:49 Strategies for Preventing and Addressing Title Fraud
22:05 Final Thoughts and Advice on Staying Diligent
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Introduction to the Podcast and Host
Welcome to me financial the podcast designed to inspire your financial life. Hello everyone. And welcome to the podcast. I am Michelle Moses, your host. I'm a certified financial planner, realtor, and former e commerce store owner.
Diving Into Title Fraud with Tanner Herrick
And today we are going to be talking about title fraud. I am excited about this one.
I bet the stories are going to be good. Uh, I, and I have Tanner Herrick here talking to me about this. He is the executive vice president of premier title here in Phoenix, Arizona. and has been in the title business for over 20 years. Premier title prides itself on catering to any situation and calls itself a boutique title company.
Thank you so much for being on. Thanks for having me. Yeah. Okay. As I said, I am excited to talk about this.
Understanding the Basics of Title FraudSo, uh, how, maybe we should start with what title fraud is. And then I want to talk about how prevalent it is, or is it very, how common it is and how much we need to [00:01:00] worry about it. So let's just talk about like what it is at first.
Well, it's obviously is defrauding, um, multiple entities across the board. So that's, you know, fraud comes in many different shapes, forms.
The Evolution and Prevalence of Title Fraud
Um, it's, it's interesting because the first, you know, 10 plus years in the industry, this really wasn't prevalent. So I would say, Oh, so this is kind of a new thing. This really, I mean, what, what's going on now, um, is, is definitely something that, uh, it's, it's weekly, it's daily, it's hourly.
What? Yeah. So we have, I mean, we have multiple sets of basically buffering systems that, that are going through and, and making sure that. We're not being frauded on all levels, you know, so there's obviously the financial fraud, um, title and escrow where they're changing documents, uh, that's happening all the time.
So every, [00:02:00] so the diligence of our staff, I mean, we can't stress that enough of how diligent they have to be because the escrow officers, you know, a lot of this stuff is, is hair on fire, things are closing in a week, you know, you've got 30 plus closings in a week. Ayo! Myself, you know, I said I had my own desk for, for years and, and thankfully, you know, I mean, I'm kind of dating myself a little bit, but back, back then it just wasn't as prevalent.
You didn't have, I think just back then was more like wire fraud. Where now, um, it's across all things are just getting more sophisticated too, because I think, you know, we've, we all have access to these computers that can do a lot more, whereas before not as many people had access to that. Yeah.
Real-Life Examples of Title Fraud in Action
So just, I mean, I'll give you a couple examples of stuff.
I mean, this is literally within the last month. Um, you know, so we had, we had a, an, an individual or group, we call them fraudsters. I think it's still [00:03:00] kind of a weird name, but that's not what they call it. Hey, whatever. Yeah. So they call them fraudsters. Um, they had hacked into an email system for one of the agents.
and was basically acting as them. They had no idea. I heard about this with when it comes to financial advising and people telling, you know, saying it was coming from the client and emailing the financial advisor. Yeah. Right. So our staff, what we tell them is, you know, when the tone seems different because we, we really know a nice thing about being a boutique title company is that we really know our people.
So when the tone's off, when the email's off. When something just feels off, you pick up the phone, we pick up the phone and call and sure enough. We called the individual, had no idea this was going on. This is at the closing, too, where they're trying to redirect funds. Wow, to a different, they're, they're trying to change all the wiring.
Trying to change the commissions to a different place. So they're basically going to take his commissions. Oh [00:04:00] my gosh. Yeah. So, wow, that's getting really sophisticated and into the nitty gritty. It really is. Yeah. You wouldn't, unless, I mean, there's just such small, minute things, but, but we're, now we're just hypersensitive to it.
It's just, it's a whole different world that we live in now. Mm hmm. You know, you have, um, you know, Two of the biggest title companies in the United States had both been breached in the last several months. That to me is slightly terrifying. Yeah. Because I mean, these are, these are companies that spend millions and millions of dollars to, you know, safeguard these processes.
And what does that mean when they've been breached? Is it that the fraudsters are getting in there and they're trying to act as the title company and do the paperwork or they're just trying to steal the information? Is it all of it? I don't really know the extent personally of these two. I mean, I know that it shut operating systems down.
I know it just completely. Oh, it shut down their computers and everything wreaked havoc. Okay. [00:05:00] The board. So it's manifesting as something completely different than it did before. You know, I mean, it was 10 years ago, we're worrying about wire fraud, you know, and, and even just, I remember when we introduced wiring instructions, Okay.
to new clients. And I remember, you know, I remember clients fighting me tooth and nail that I, that I had to read it out to them. They had to read it back. They had to have that conversation. They thought it was crazy. Now I can't imagine any of our staff not, not doing that. Yeah. At least twice. Right. And I think that's what everybody knows.
If you've closed on any real estate transaction, you know how important the links are and the numbers and yeah. And that it's correct. Yeah. Yeah.
The Complexities of Deed Fraud
Yeah, I think we had touched on, um, I'll touch on the, the deed stuff that we were talking about. Um, so the financials one completely different thing, but the deed, uh, we see all kinds of, I mean, we touched on this for a minute earlier was there are certain groups across the United States that are going and claiming eminent domain, which [00:06:00] is crazy to me that, you know, you can go.
So what they're doing is they're actually targeting, um, vacant lots that are cash. There's no debt on them. So people aren't consistently looking at what that, these are, these are large landowners. This is what I read in the paper, and this is why I contacted you to do this, is I read this in the paper that a lot of it is happening on land, vacant land that has just been sitting there for a long time that doesn't get visited a lot, you know, like there's not a lot of activity.
Yeah, so there's, there's, or vacant houses, I guess, too. Right. I've been sitting there for a long time. So there's two different, I think the city did it a little bit more for maintenance purposes. Um, you know, homelessness, maintenance, um, with our large land owners that are just landowners, especially in Paradise Valley.
I have one particular story where a gentleman, large developer, Paradise Valley, um, this particular group had taken a deed and quit claimed it over to them. And, and somehow, some way got this recorded. So when we pull up our chain of title, which is our historical data [00:07:00] Mm-Hmm. , when we go to title pull, a title commitment that pulled in.
So I have a client that's completely freaking out saying, how the heck did somebody do this? Did they fake his signature? Oh, okay. Oh yeah. So that's how, 'cause the, does the signatures have to, to Matt, the no seller has to actually obviously define Yeah. Right. So it's a fictious document. Okay. Um, you know, you've got.
a group of people who are claiming eminent domain over certain parts of Phoenix. I mean, we've seen this multiple times. And so do they just print up a deed of trust and then they're just sending it to the city to be filed? They're not even going through a title company or are they going through?
They're definitely not going through a title company. They're just sending it to the city because I've done that. I've quick claimed my deed, um, to, um, a rental house, you know, a house I lived in and to, yeah, and you just send it into the city. Right, so typically Or the county, I should say. If there's no title insurance done and it's done by a title company, in the top left it'll say Courtesy Recording of, and then it'll name the title.
Okay. Or, you know, you can take it down [00:08:00] to, you know, the recorder's office, Maricopa County Recorder's Office. And, and they can go through and report it, which I personally, I think there needs more, more checks and balances system in that system. Yeah, there has to be, yeah. Authentication there has to be, I mean, this is becoming a huge issue.
Right. So I think now, um, you know, it's really bringing to light. the inadequacies of that process. Right. Well, and don't you think that the, because you can just go online and search up any deed of any land, and even if you had it in a trust or something, you're somebody still signing on that, right? Yeah.
And they could just create something. And if they're targeting you. Yeah. They'll duplicate the vesting. They'll basically go off and whoever the sellers are, they'll see how they took title. All you got to do is look up the legal description. I mean, warranty deeds, you can, you can find them anywhere. A quick claim deed, warranty deed, anything like that.
Yeah. So, that's where I see a huge issue on a state, state by state. I don't, I can't speak to other [00:09:00] states, but just locally here. I see that being a huge issue. I agree. Yeah, because I lived in Missouri for a period of time and it was really hard to find like you had to have an account in order to view the deeds and you know, you need to be a lawyer.
And I do think that something like that. I don't know how it is from state to state, but you know, here, yeah, it is pretty open. And, um, and so it kind of reminds me of how, uh, the credit was when you, you get your identity stolen. Whereas now, if you get your identity stolen, you know, it's like, Oh, okay. You know, it happens to so many people.
Um, but at the beginning it was so hard for people to prove it. Right. And they didn't, it wasn't so, so common. So it kind of seems like this is. It's kind of the same thing, almost, only it's property. It's kind of a big deal. It does, because it muddies up the chain of title. So when the next person goes to go buy that, they're going to say, well, why is there a correct?
So then you'll have to put a corrective deed on the property. Well, yeah. So yeah. What [00:10:00] happens with this developer? So did you have to go to court and prove it was fraud or how do you do that? Yeah. I mean, essentially we went, because we, we knew what it was. We can go record. So we went and did a corrective deed.
Okay. That took them off. But we also, you know, you also let the recorder know that this is so our head of title, um, basically went out, reached out to the recorder's office and said, you know, this is, this is what's going on in this particular group. We've seen it multiple times. So if you do see this group, if something like this is on something, let your people know.
Okay. So it's really about awareness. Right, right. if we know certain groups are doing this over and over and over, uh, we kind of know who the guilty party is. So I think it's, it's upon all of us in the industry, you know, to, to try to catch all of this, just educate everybody on what's going on. Yeah. It's kind of a group effort.
So is the deed that you filed called a corrective deed? That would be a corrective deed. Okay. So it's actually titled that and you're stating exactly why. [00:11:00] Okay. So this is an erroneous, you can record an erroneous recording. Okay. The re recording. So, which I kind of go back to how does anybody know who's the real right?
I mean, that's kind of where it gets to is like, okay, well, we have all these legal documents. How do I know that you're the right person and you're not the right? Yeah. I could see how this gets really confusing and how we might need to step it up a little bit with this process. I think across the board, everybody needs to be more, you know, diligent and yeah.
Yeah. So what would have happened if you wouldn't have caught that? Or if your developer wouldn't have caught that, would they have been able to go and sell that property? They've tried. I mean, so we've had that happen as well, where they took it a step further and then they went and basically put one, we had one that was actually up on Zillow.
So they took it, they did this, they put it on Zillow, we get the escrow. We look at it, we had, they, so they tried to close it with two different [00:12:00] title companies, just to try to get one of them. Oh my gosh. So the other title company was actually at the finish line where, where we figured out. This was fictitious.
We had to actually call the other title company. And how did you know the other title company was doing anything? One of the other agents. Oh really? Yeah, one of the other agents was confused as to who was doing the actual closing. Oh my gosh. Yeah. So really the real estate agent needs to be really diligent too.
I mean everybody needs to be diligent. Yeah. Because, I mean, if you, they're contacting an agent to put this up for sale, most likely. So the agent really needs to verify that they actually own it and what the, I think that also is going to be coming into play. It's not just, Hey, you know, can you sell my house?
You know? So documents had come over from two different title companies. Thankfully on that one, you know, where we had said something over the other title company had sent something over and they were They were literally ready to record on it. Wow. So, just to unwind that mess. I mean, it just causes, you [00:13:00] know, so much time and energy for your staff.
Right. And I think that's why our, our Heidel team is so hypersensitive to it, because they know how much of a pain it is to unwind. I totally get that. Yeah. You don't want to make a mistake kind of thing. Right. Yeah. Yeah. And so who is, who really loses in this is not only the person that owns the property, but the person that was going to go buy from these fictitious people, because they're going to then wire to these fictitious people, the fraudsters, and then they're not really going to own a property.
Yeah. Yeah. If, if that wire would have went out from, so you had the buyers who actually wired it to title company B, thankfully the money didn't go out. They were able to get their money back, but that's, yeah. I mean, that's, that's one of the things that we're seeing now that is just so wild.
Strategies for Preventing and Addressing Title Fraud
that these people are coming up with this, but they're, I think that's another reason why they're making everybody register.
So what, what we typically do on something like that, when there's a piece of land, [00:14:00] the tax bill is going to go to a completely different address, right? So we send all the information. We look it up online and make sure that all the documentation and that's actually helped us once as well. Where we had that happen, we sent the docs over, we had a person call us back and say, What the heck?
My property's not for sale. This is something that literally happens. monthly. I mean, we do. I had no idea it was that often. Yeah. I mean, we do, you know, 500 plus transactions a month. So for us, I mean, there's always going to be somebody out there. Yeah. Okay. What I read, um, when I was reading the article before I called you to do this topic, they said to do a Google alert on the address of your properties so that if it does come Zillow or anywhere else, um, that you would get an alert on it.
Right. So I did that, even though I live in the house. But, you know, if I had, yeah, but if you had a vacant piece of land or something, I would highly recommend, I mean, just cause you don't go visit it [00:15:00] and it's not something, it's definitely something that could happen under, yeah, right under your nose. I think they're definitely looking for safeguards like that across the board in the industry that, you know, can alert people to stuff like this.
Cause some people don't know. I mean, my parents personally, they own land all over, you know, they've several states and. You know, they had stuff in Nevada and Nebraska, and there were years where they didn't check on anything. Yeah, that's, that's why you, yeah. Could have been transferred. You're owning land for 10 years plus though.
It's not like something that you're, yeah. Right. Going to check on. Yeah. Oh my gosh. Okay. So do you think that's a good thing to do is do a Google alert on your address? 100%. Okay. You'll never be too safe. I know. I mean. Yeah. I feel like I, with all the stuff that we subscribe to, like, I'm slightly paranoid now where it's like, okay, lifelock, you know, like what, what kind of alerts can I have, you know, on everything I have.
Yeah. Yeah. Because it's just a pain. I mean, you know, it can be fixed, but you don't want to go through the time and effort. I mean, it'd take hours of days. Yeah. And it's better to know as soon as it happens. [00:16:00] Yeah, absolutely. Because some of this stuff, we just don't know. It's yeah. We don't check. So, okay. So it sounds like you want to make sure that you're going with a good title company.
That is, uh, you know, cause I, I feel like when you're doing a transaction, it's just kind of like, Hey, go with so and so title and you really do maybe want to call the title company and say, what are you doing for fraud? Well, you know, how with it, are they, or maybe get a recommendation of from someone that, you know, like, you know, that they're more boutique, like what you are.
Right. Okay. So the nice part about us, so we. Our shareholders are first American title. So it's like having big brother in the background watching, but we get to operate as, as a boutique agent. Which is, it's really is the best of both worlds because there's several levels of authentication, verification for fraud, for wire fraud, for deed fraud.
Okay. You know, that's, that's why I feel like we're pretty lucky that, you know, with some of the bigger, bigger title companies, it's, it's really a volume [00:17:00] basis. We're not, we're not really focused on that. That's not our business model. Ours is really quality over quality. So, okay. Well, and you want, so, and you want, so you're the smaller boutique and boutique firm, but I think also the people that, cause there's always people that think they can do real estate transactions on their own, off the side so that they don't have to pay.
And I just think with all this fraud, that it might be a good idea to have people that know what they're doing and just pay the. 1, 000 or a couple thousand dollars that even if you're doing it on your own, you know, just go to a title company and say, Hey, can you check this out or something? Right. A hundred percent.
Okay. Yeah. I mean, that should be part as a real estate agent, that should be part of your team. Yeah. I mean, we do, we do a lot of education. We do a lot of classes, you know, we do a lot of stuff like that, where. Um, I think it's paramount in this day and age, the more education that we have, we pass that on, you know, to our agents, which, you know, it, it, it really is a partnership at the end of the day.
So [00:18:00] it's all about educating your partners. Yeah, yeah, I agree. And I think that, um, the real estate and I, I get it with like red, Fenn and, you know, all Zillow and that people are just way more educated about real estate. Um, but I sold a house. I tried to sell a house on my own when I lived in Missouri and because I was like, I want to see what this is like.
And yeah, real estate agents and title companies, I really value them now and what they do because there is more that goes into it than what I think the average person knows. And if you don't want to have fraud happen to you. So are there other things that you think that people could do? I mean, I would think just getting on the phone.
Right. And calling. Yeah. It's really as simple as being diligent. Yeah. I mean, it's, it's kind of common sense stuff that, you know, we all get so busy and everybody's going a hundred miles an hour, but it's really slowing down and, and taking a second and third look at your documents and, you know, the correspondence going back and forth.
I mean, it's. Yeah. This isn't rocket science. It really is something that, you know, where we're just a little bit more diligent, slow [00:19:00] down, take the time to look things over and you're gonna, you know, it's going to happen. Right. And it just makes sure, yeah. And if you're diligent about it, you'll probably check it or you'll catch it.
We catch stuff weekly. Yeah. And I could, I could give 15 more stories of, of things that have happened within our company. There were, um, when I took some fried classes, uh, on the financial planning side and the email thing came up, I had no idea about that. Somebody had hacked into this, uh, client's email and was sending, you know, trades to, you know, Hey, to set, I want to redo my bathroom.
Can you send 50, 000 to such and such bank? And they were changing the bank, you know? Yeah. And, um, and I'm, I'm telling this story because you guys can go into your email and look at your sent messages because if someone has hacked into your email, but get a really good, you know, set up your two factor authorization, set up your authentication app, you know, do all of that, because that really does catch a lot of it if you just set up those things.
Um, but then [00:20:00] he went into this, the client went into sent messages and could see. messages that these people were sending from his email address. So I had no idea until all of that. So, um, yeah, these people are getting super sophisticated. I mean, I just got a text yesterday about, Hey, we're trying to deliver a package to your house and we don't have the right address.
Click here to update it. And it was from a hotmail account. I know. I don't think so. We have, as of we had another one last week, this kind of reminds me is, is we had another one that was, they were going to wire in 10 million. Just into our escrow account. And, um, too good to be true. Yeah. This is like the prince of Africa thing where you're like, I'm like, come on guys.
Like you guys are smarter than this. Like, I was like, well, the first question I ask is have you met them in person? Have you done any form of, you know, other than email communication? anybody can, you know, the phone. It's like, have you seen this person? Have you been with him? Have you went, you know, just asking questions like that.
I mean, I told him, I said, we'd love to close another 10 million in [00:21:00] escrows, but at the same time, we don't want, we don't want you guys wasting any time on this. So I kind of gave them a little bit of a list of what I thought, you know, these are questions that I would personally ask. They did them. And, uh, They went another way.
Of course, they went, they went another direction. Yeah. Okay. So a lot of it is just being diligent. Yeah. Yeah. Looking at the details and yeah. Okay. But I do appreciate the fact that our, you know, this is somebody who's been in the business 20 years as well, where it's just, they're asking me for my advice, which I think as a, as a partner, I think, you know, a valued partner, you know, you have those conversations, you brainstorm on, on what you think, and then, you know, I'm up with a plan.
Yeah. Yeah. Okay.
Closing Thoughts and Advice on Title Fraud
I had no idea that this was so prevalent. You guys, I thought I was going to ask this and he'd be like, yeah, it happens like once a month. It's not, this is like a regular thing. Well, cause it's big money. So I guess it's really big money. Yeah. So I guess that's why they go after it. It's this isn't 10 gift cards.[00:22:00]
Nope. Yeah. If they, if they hit this, this is like a big payday. So it really is. Yeah. Okay. So we think being diligent, picking up the phone, uh, putting a Google alert is a good idea. Google alerts, great. Uh, knowing your title company and knowing that they, yeah. So picking up the phone or getting a great referral for a title company so that you know that they're dotting the I's and crossing the T's.
Any red flags that you ask your team. I mean, if you feel off about something, there's, there's always, you're going to have that intuition. Where it's, if it's too good to be true, I think 99 percent of the time that's just follow your instinct on those things, call your team, your partners. And, and kind of, you know, put together a plan, right.
Yeah. And I think as a real estate agents, we need to verify that they actually, they own the land or the house before signing a contract and listing anything there needs to be some verification process. Yeah. And that's an easy call to your title company. Yeah. Absolutely. It takes us two minutes to do.
Okay. So. All right. Wonderful. All right. Well, you think we're [00:23:00] missing anything? You got any really juicy stories that we should wrap up with or anything? I mean, that one you told is pretty juicy. Yeah, I went, I went out the gates with the juicy ones, so sorry. No, that's okay. No, I was excited to do this topic because I don't, I don't think enough of this has been brought to light.
I agree. You know, it's kind of that, the ostrich head in the sand deal. And I, I appreciate you bringing me on. And I think this is, this is great because it brings a little light to a subject that, that needs, you know, good. It needs some light shine. Good. Yeah. I agree. Cause the article I read was, I mean, short.
Yeah. And, uh, it gave just a couple of tips. And I was like, man, we really need to get the word out about this. So good. I'm glad that you feel that way. Wonderful. Okay. Well, I hope that you guys got something out of this and thank you so much for listening and thank you for being on. I appreciate you taking the time.
Okay. Have a great day. And thanks for listening to you guys.
Disclaimer: The information provided in this podcast is for general informational purposes only and should not be construed as professional financial advice. Always consult with a qualified financial advisor or professional before making any financial decisions. The hosts and guests of this podcast are not responsible for any actions taken based on the information presented.