Recognizing Title Insurance FraudWhenever a property is purchased the issue of title insurance comes up. This type of insurance is in place to protect the buyer in the event that there is a problem with the title. In most cases, title insurance is never needed once the transaction has been finalized. However, there are some real estate insiders who are taking advantage of this coverage. These individuals are taking part in title insurance fraud which is currently costing title insurance companies millions of dollars in bogus claims each year.
The premise behind property title fraud isn't terribly complicated but in most cases it involves several people all working together. These people are often the real estate agent, the title company and in some cases even the lending institution. The only person not in on the scheme is the individual or organization buying the property. A typical title insurance fraud will involve a home that is up for sale. When a person comes along who wishes to make an offer to purchase, the scheme begins. Once the offer to purchase is finalized the process of securing title insurance begins. The buyer will likely be referred to a specific title insurance company. This company appears to be legitimate on the outside and their job is to secure a title insurance policy for the property which will protect the home owner should a problem with the title arise. Meanwhile the title insurance company is securing another offer through another real estate agent for the same property. Typically this second offer will come from someone who lives a distance away and is also very involved in the scam. The second individual will also retain title insurance and it will be them who eventually begin the title insurance claim. These set-up situations often result in millions of dollars in lost money to title insurance companies each year. Builders often take part in these schemes as well, through the use of newly built properties. They apply for a title loan and once the property is sold, the buyer does as well. Naturally this procedure also requires a knowledgeable real estate agent. Many states are cracking down on those who participate in title insurance scams. The most disconcerting aspect of this particular type of fraud is that many times the home owners are the ones who suffer the most. A person can actually have their title called into question if the property they purchased becomes the focus of a title insurance fraud investigation. It's incredibly important for anyone purchasing a home to be fully aware of the reputation of the title insurance company and agent they are dealing with. Another helpful hint is to locate their own title insurance company as opposed to blindly dealing with the one recommended by the real estate agent. |