Falsely and fraudulently creating or changing a legal document is a forgery. It is a felony that carries a sentence to a state prison. It is also an act that has the potential to muddy ownership of property and leads to long legal actions.
Forgery is becoming more common, and the victims are usually unsuspecting property owners. According to title industry data, forgery losses have risen in the last decade, accounting for more than 20% of all losses paid by title insurers. According to these figures, the consumer’s chances of becoming a forgery victim are at an all-time high. Forgeries affecting real estate can be made in a variety of ways.
Someone, usually a family member or associate, may fake a deed in order to transfer the legal title of the property without the knowledge of the genuine owner. A counterfeit instrument falsely indicating payment of the secured obligation might invalidate a lender’s recorded security agreement for a loan, allowing another loan to be obtained fraudulently. A note and deed of trust can be forged by someone who then sells the note secured by the deed of trust and then vanishes, allowing an unwary homeowner to discover the cloud on the title when the purchaser of the note starts foreclosure proceedings for nonpayment of the obligation.
A notary impersonating a notary or a legitimate notary who fails to verify that the person signing the document is not the person whose name appears on the paper might both notarize a false document.
The growing trend of forgery has gotten a lot of attention. Title firms can no longer focus solely on mitigating risks originating from inadvertent or erroneous recording; they must now also deal with illegal conduct. In order to narrow gaps that forgers may otherwise exploit, the title industry is reevaluating its title and escrow practices and tightening notarization processes. Additionally, corporate personnel who uncover forgeries during title inspection and escrow closings will receive special bonuses.
The title insurance sector also collaborates with law enforcement agencies, assisting them in the prosecution of forgers by making industry expertise available and sharing the findings of their investigations. In response to great public outrage, the California legislature increased the penalty for forgery to a felony punishable by up to three years in state prison and severely limited the granting of probation in the case of numerous forgeries or repeat offenders. A punishment of up to $75,000 may be levied for forgeries that impact homeowners. The title business has worked hard to limit the prevalence of forgery and the chances for forgery by improving practices and cooperating with enforcement agencies.
But, as a property owner, what can you do about forgery? You may not be able to avoid a forgery, but you can protect yourself. Title insurance protects you from forgeries in your title that may have occurred before your title insurance policy was issued. You would face the uncertainty and expense of settling legal matters on your own if you didn’t have this protection.
Forgery of Real Estate Documents
For virtually as long as writing has existed, there have been laws prohibiting document falsification. For the most part, forging techniques remained quite unchanged. Modern digital technology, on the other hand, has substantially increased the number of people who can produce fake documents. Although “paperless” applications are becoming more common in real estate transactions, most aspects of the industry remain firmly planted in the paper. This is especially true in the case of public real estate records. While the media in California may focus on how blockchain and other digital tools are transforming the real estate industry, real estate counterfeiting is still mostly based on the creation of documents that can be printed on paper.
Although the forging of real estate deeds may seem odd, the frequency of counterfeit documents has been on the rise. The California Department of Real Estate got so worried about the matter in March 2012 that it issued a consumer notice to inform the public about deed scams targeting unwary homeowners. If you’ve been the victim of deed fraud, you’ll need to file a lawsuit to get your title cleared.
The Problem is Rife
Forged deeds are exactly what their name implies: a fraudulent operation in which a property deed is created, the homeowner’s signature is forged, and the forged document is then used to claim that the property’s title has been transferred. Using fraudulent identification, fraudsters are usually able to get the deed notarized. The scammer can then record the deed and use it to obtain a mortgage loan on the property once it has been notarized. Long before the bank commences foreclosure procedures against the unwitting homeowner, the offender flees with the funds.
The Problem is Yours
Despite the fact that forging is a felony punishable by steep penalties and prison time in all fifty states, you are ultimately responsible for protecting your home’s ownership rights. If you get documentation in the mail for a mortgage loan or transaction that you are unaware of, or if the county recorder notifies you of the recording of a deed that you have not signed, you are a victim of deed fraud. Someone else may be claiming ownership of your home if you suddenly stop getting property tax bills or if you receive a notice of default even if you are not behind on your mortgage payments.
The Problem is Solvable
Report forgery to the authorities in your area. Then you should get legal advice from a professional real estate attorney. A judicial proceeding called a “quiet title,” which clears away false and illegally recorded deeds can be used to invalidate bogus deeds. The suit may be supported by the district attorney’s office in some states as part of a larger criminal prosecution of the fraudsters.
The Problem May Be Insured
To find out if falsified deeds are covered by your title insurance policy, contact your title insurance firm. Your policy is intended to protect you against damages resulting from faults in your title that you may not be aware of. A sort of hidden flaw that insurance policies cover is prior forgeries, such as a forged deed indicating that a previous mortgage was discharged when it was not. Depending on your coverage, the insurance company may compensate you for your losses by paying you money or by filing a quiet title litigation to correct the problem.
We at Mortgage Audit Online have more than a decade of expertise representing property owners and buyers in court. To schedule a confidential consultation, please contact us online or call our legal firm.
For information on foreclosure defense call us at (877) 399 2995. We offer litigation document review support, mortgage audit reports, securitization audit reports, affidavit of expert witness notarized, and more.