Real Estate Fraud

Real Estate Fraud

The less talked about sub-sect of America's fastest growing crime



A Growing Threat to an Aging Population

On July 18th, 2002, the United States Senate held a hearing before the Special Committee on Aging. Senator Larry Craig of Idaho opened the hearing, stating, "Identity theft is the nation's fasted growing white-collar crime. It is estimated that over 700,000 Americans become victims of identity theft each year. Several thousand of those victims are senior citizens, who are uniquely vulnerable to this insidious crime." Almost twenty years later, little has changed but the potency in which these criminals act. 

Almost all laypersons, vulnerable seniors included, are acutely aware of the risks of identity theft in its most common forms- credit card fraud, social security fraud, mortgage fraud, wire fraud and even the all to common elaborate telemarketing fraud schemes. We've all heard one of those stories, right? 

What most people are not aware of is the more recent spike of a potentially even more catastrophic faction of identity theft: Real Estate Fraud. In 2020, the FBI estimated consumers lost more than $222 million in real estate schemes, a 13% increase from the previous year. That trend has not been curbed.

In North Iowa, Southern Minnesota, and across the rural Midwest real estate is by and large our senior population's most valuable asset. This is no secret to the millions of fraudsters. Technology has aided the simplicity and ease of real estate fraud, without simultaneously aiding our detection and prevention. In part, due to our real estate system's mechanisms that still operate largely the same as it did in 17th century England- with only less verification.

This is what makes real estate fraud so attractive to white-collar criminals. Anyone, with even a modicum of connection to a person can successfully draft a document, forge a signature(s) copied from the public record, affix a witness seal, create a false electronic recording login, and file the forged document in the public record with little to no risk of detection. With a little patience, the owner or heirs of the property subject to the fraudulent recording will either transfer and/or finance the real estate.

At that point, property owners have a choice: 1) spend thousands of dollars litigating to remove the cloud on title, or 2) pay thousands of dollars to the false identity/entity to have the encumbrance removed. Fraudsters bank on the latter and are unfortunately rewarded with the gamble more times than not.

Our duty as officer's of the court is to stand up for those defenseless victims of these hideous acts, and we must stand up at the point of the transaction. When our clients state they don't remember signing that mortgage, or they don't have any memory of an encumbrance to their property existing we must no longer rely on the mere recording of the instrument to overpower our client's timid, insecure statements questioning the instrument's validity. We have an ethical duty to investigate their claims, and verify the validity of documents. Not simply clear title and chalk it up to a mere payoff and decreased monetary value of our client.

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