Title Red Flags

The property is free and clear.
Sure, some property is free and clear, but most property is not. You need to ask why are there no liens? Is it because the person either has a lot of money or paid the property off after 30 years? Or is it because there is a forged reconveyance in the chain of title or because a deed of trust was missed in the title search?

Title was obtained by an uninsured deed.
An uninsured deed in the chain of title is fine if it is a transfer from the grantor to the grantor’s family trust, or from a person to himself and his spouse as joint tenants. In both cases the grantor has not parted with title. But otherwise the deed needs to be questioned:

  • Be sure the signatures on the uninsured deed match those on a previous institutional deed of trust.
  • Obtain an affidavit of forgery

Reconveyance is not accompanied by a transaction that could have paid off the deed of trust.
How often do people pay off a deed of trust with cash instead of with a new loan? Sure, it happens on occasion, but it is so rare that it is highly suspicious. The reconveyance is often a forgery.

3rd Party disbursement of funds.
Beware of seller’s instructions to pay a 3rd party who does not hold a secured lien. Obviously, paying off credit cards as required by a lender, HOA dues, broker’s commissions, etc… are normal. But large payments to third parties is often a flag of loan fraud in which the property value is being inflated in order to defraud the new lender.

Proceeds are being wired offshore.
No documents are executed in the escrow office. Obviously, signings outside of escrow are common. But be aware that this can be a complicating factor when combined with other flags of forgery. In fact, requiring documents to be signed in the title or escrow company’s office is often a way to verify the validity of signatures, such as when there is an uninsured deed in the chain of title.

Absentee owner.
Naturally, sales by out of state or out of country sellers are common. But forgers prefer property where the owner is nowhere around, so be aware that this can be a complicating factor when combined with other flags of forgery.

MOST IMPORTANT: Your suspicions are aroused even if none of the flags described above apply.

Don’t hesitate to consult your WFG Title Representative any day, any time!

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