NATIONAL NEWS

A new type of identity theft is targeting homeowners by combining identity theft with mortgage fraud. The Federal Trade Commission (FTC) has received thousands of Real Estate-related identity theft complaints over the past few years. And as the problem of identity theft continues to grow—especially in states like California, Florida and Nevada—the number of Real Estate-related complaints is also on the rise.

According to the Mortgage Asset Research Institute (MARI), reported complaints of mortgage fraud in the United States increased by 42 percent in the first quarter of 2008 from a year ago, and identity theft was one of the biggest incident types.

Some Real Estate identity thieves steal their victims’ identities to take out loans, while others actually sell homeowners’ properties without their knowledge. There are many variations of Real Estate identity theft. Some homeowners say that thieves target them while they are in the process of buying or renting a home, while others say that their homes are stolen right from under them.

Here’s an example of how it works: An identity thief steals a homeowner’s personal information, including name, address, and Social Security number. With this information, the thief might create fake driver’s licenses or other types of identification. He then forges the homeowner’s signature on the documents required to transfer property and files the documents with the county recorder of deeds. Once this process is complete, the house is deeded in his name. In most cases, the thief will resell the house before the homeowner even realizes that he or she has been victimized.

One homeowner reported that his rental property was nearly repossessed after identity thieves took out a second mortgage against it. The fraudsters counterfeited a deed and took out a mortgage for more than $100,000 using the false documents. The homeowner was oblivious to the crime until he received a letter from the bank, warning him that his house would soon be repossessed if he did not make payments on the mortgage. In another case, a woman found out she was a victim of identity theft when she tried to buy a home but was denied credit because she was told she already owned a home. After checking her credit report, she discovered that she had two mortgage loans in her name totaling nearly $200,000. An investigation showed that an identity thief had stolen the woman’s identity and was living in one of the homes with her family.

To make matters worse, some identity thieves are specifically targeting homeowners facing foreclosure. In some cases, victims are talked into signing over their properties to identity thieves who promise them some type of payment for their homes. In most cases, the victims never receive the payments, lose their houses and still owe their mortgages in the end. The Better Business Bureau (BBB) also warns of another type of foreclosure scam in which fraudsters pose as Fannie Mae or Freddie Mac mortgage lending companies and send letters announcing a lottery that gives people who lost a home a chance to buy another. According to the letter, the F & F Equity Draw has $50 million to give away and recipients “have emerged a winner of $5 million.” When a BBB representative contacted the phony Fannie Mae and Freddie Mac, he was told to use Western Union to wire $850 to a Las Vegas location. Individuals who fall for this scam will lose the money they send in, and they receive nothing in return.

Today, identity theft impacts both homeowners and Real Estate agents around the world. When it comes to protecting yourself and your clients against Real Estate-related identity theft, it is important to understand the risks and what you can do to avoid them. Here are a few tips you can use to help you and your clients avoid fraud:

• Check your credit report once a year. The law states that you can receive a free credit report from each of the major credit-reporting agencies once per year, which you can order from the official credit reporting Web site at www.annualcreditreport.com. If you see any suspicious activity, such as a new address or a home loan you don’t recognize, ask the reporting company to verify the item.
• If you receive bills or loan statements from mortgage companies you don’t have accounts with, investigate why they are in your mailbox. Don’t just assume it’s a mistake. Take the time to verify any bill that comes to your address.
• Always shred any documents containing personal information before throwing them in the garbage. Identity thieves often sift through garbage to find personal details, which they can then use to commit identity theft.
• Beware of the Welcome Wagon. The Welcome Wagon company welcomes families to their new homes with a package of advertisements and coupons from local businesses and services. If your home has been fraudulently sold, you may receive a Welcome Wagon package even though you are not new to the area. If this happens to you, call the company and asked why they sent the package.

? Regularly check with the recorder of deeds office in your county to make sure that there are no unauthorized changes. If you find anything that looks suspicious, immediately contact your mortgage company and county officials.

Be wary of offers that seem too good to be true. They usually are. Be sure to check with the BBB if you received a foreclosure offer that seems suspicious.

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