As the Federal Reserve begins to ease interest rates, even modest cuts are expected to boost housing market activity gradually. But with renewed movement comes renewed risk — especially from fraudsters looking to exploit real estate transactions.
Among the most concerning trends is seller impersonation fraud, a fast-growing scheme that’s putting homeowners, buyers and title professionals on high alert.
From investment scams promising high returns and low risk to phishing emails that appear to be from legitimate businesses, criminals are finding more ways to exploit unsuspecting Americans into divulging sensitive information or depriving them of hard-earned savings. A Pew Research survey published in July found that an astounding 73 percent of U.S. adults have been victims of online scams or attacks, with about 1 in 5 reporting they have lost money as a result.
As criminals branch out into real estate, the American Land Title Association (ALTA), a national trade organization for the title insurance industry, is setting a high bar for protection from seller impersonation fraud, which has increased in recent years.
New policies to protect
ALTA announced two new policy endorsements in August that will help homeowners recover if they become victims of seller impersonation fraud. The endorsements allow new and existing homeowners to add post-policy protection against forgery of a deed or mortgage, giving them the peace of mind that only a reliable, state-regulated insurance product can provide.
According to ALTA data, in 2023, 28 percent of title companies reported instances of attempted seller impersonation fraud, many of which were stopped by title professionals.
In this scam, criminals impersonate property owners to illegally sell property by using the real property owner’s personal information, such as Social Security and driver’s license numbers, in the transaction. Given that many of the properties targeted are non-owner-occupied, it can take months or even years for the real owner to find the fraud.
Both new and existing homeowners are susceptible to impersonation fraud, and there is no easy fix once it is discovered: The legal process can take significant time and cost thousands of dollars in attorney fees. In fact, the average title insurance fraud and forgery claim costs over $143,000, an amount that would leave most households without title insurance coverage financially devastated.
Under ALTA’s new policy form endorsements, if forged deeds or mortgages are recorded against a homeowner’s property, it is the title insurer that covers any potential legal costs incurred to correct the public record — not the homeowner.
Seller impersonation fraud threatens a monumental life event: the purchase of a home, which brings stability, financial security and fundamental property rights. The title insurance industry is honored to play a part in this crucial milestone, and we will continue to protect the American dream so that it doesn’t turn into a nightmare for victims of seller impersonation fraud.
Richard H. Welshons, MTP, NTP, is the president of the American Land Title Association. Connect with (ALTA) on LinkedIn.
