Title fraud is usually something that most new homebuyers assume cannot happen to them. After all, the lengthy and detailed process of examining everything at closing should prevent any fraud from occurring, especially if you closed in person, right? Unfortunately, fraud can happen at any time, even years after you have purchased the home or property. The good news is that there are measures you can take to lessen the damages, and having title insurance to protect you should be the first step. Here’s what you need to know about how to spot fraud and how to utilize your title insurance to stay safe from it.
What Is Home Title Fraud?
Home title fraud is an umbrella term that refers to the process of fraudulently modifying or misusing information about a home or otherwise changing the details of documents. This could include if someone in the past forged a signature or that someone in the present has gained access to important paperwork about your home to alter the information.
Title fraud can have wide-reaching effects, putting you at risk of not just a legal battle to fight the fraudulent behavior but also the risk that you could be responsible for significant financial obligations, or even lose the home entirely.
What Is Title Insurance?
Title insurance is a type of insurance product that functions a bit differently than other policies you may be familiar with. Unlike health insurance or car insurance, you only pay for title insurance once, and then you are protected for the entire time that you own the property.
Title insurance is an important part of a comprehensive plan to protect your investment, because it shields you from many of the consequences of fraud. However, the exact type of coverage and limits will depend on the policy that you select. Work with a reputable agency to learn more about the title insurance that you may qualify for.
Prior to settlement, you will typically be required by the lender to purchase title insurance. This policy is to protect their investment in your property; a lender’s policy will not cover you. You will need to acquire an owner’s title insurance policy in order to benefit from title insurance protection.
How Title Insurance Protects You Against Fraud
Title insurance protects you against fraud in a variety of ways depending on exactly what kind of fraud has occurred. Some of the most common fraud involves someone gaining access to your accounts and completing paperwork or modifying existing data to put the home up for sale while representing themselves to be the owner. The fraudster then collects the proceeds from the sale and vanishes, leaving both you and the people who think they now own your home to pick up the pieces.
Another tactic involves fraudulently modifying your home’s paperwork to change the name of the owner and transfer ownership to the person committing fraud in which case you could end up eligible for eviction from your own property.
People trying to defraud you can use your home as collateral for a substantial loan and then not pay it back, resulting in you being responsible for the payments, or placing your home in foreclosure.
In all of these situations, title insurance can be invaluable. Fighting against these claims can result in a lengthy court process, but title insurance can help you cover the costs. In fact, some insurance agencies will even represent you in court during these matters. Additionally, should you be faced with financial hardship due to being forced to pay a debt that is not yours, title insurance can provide assistance.
Even if you have title insurance, always keep your eye out for suspicious behavior. Check your ownership documents from time to time, and pay attention to your mail. If you start receiving mail in someone else’s name, or stop receiving mail that you expect, this could be a sign that someone is attempting to alter ownership or change the impression of who lives there. If you remain vigilant, you can fight against fraud using your insurance coverage while the problem is still in its early stages.
Trust the Pros to Help You Pick the Right Coverage for Your Needs
Title fraud can be a serious problem that threatens the investment you have made in your home or property. Having a robust title insurance policy can shield you from many of the devastating impacts of fraud. The experts at Mathis Title Company would be happy to help you evaluate which type of coverage would be best for you. Contact our team to learn more or to schedule an appointment to get started.