A pernicious form of real estate fraud appears to be on the rise, with consequences that can be devastating for homeowners.
Known as deed fraud or home title theft, the scheme involves forging documents to record a phony transfer of property ownership. Criminals can then sell the home, take out a mortgage on it, or even rent it out to tenants to turn a profit.
Last month, a community organizer in Detroit, MI, was charged in a particularly egregious case. Federal prosecutors say Zina Thomas, 60, stole more than 30 homes in and around the city by forging quitclaim deeds transferring the properties to fictitious entities, and then selling them to unwitting third parties.
At the time of the alleged thefts, Thomas was working for the nonprofit United Community Housing Coalition, where she was director of homeownership programs.
“This scheme targeted some of our most financially vulnerable citizens and was perpetrated by an individual whose job it was to help those very people avoid losing their homes to foreclosure,” said Dawn N. Ison, the United States attorney for the Eastern District of Michigan, in a statement.
As in the Detroit case, deed fraud often involves quitclaim deeds, which are simple legal documents that transfer ownership without any guarantees about the property. Their common legitimate use is to pass ownership between family members.
However, any type of home deed, including more traditional warranty deeds, can be forged by increasingly sophisticated criminals, says David Fleck, a real estate fraud attorney based in Southern California.
It’s not just stealing house keys — deed theft can come about from forged documents. Getty Images/iStockphoto
“Twenty-five years ago, it wasn’t easy to forge documents. Now, literally every computer has the technology to create a believable forgery, and you can buy a fake notary stamp online. So the technology has very quickly gotten ahead of the systems we have in place to prevent this,” warns Fleck.
In his private practice, and before that as a prosecutor in the Los Angeles District Attorney’s Office, Fleck has dealt with scores of cases of home title theft. In one case, he’s even seen an elderly homeowner evicted from her own house of 25 years, with her equity wiped out, after crooks forged foreclosure documents.
Although there are no national statistics tracking home title theft, the FBI’s 2023 Internet Crime Report tracked 9,521 complaints of cyber-related real estate and rental fraud last year, with losses totaling more than $145 million.
How to protect your home against title theft
A growing number of US counties offer free services that allow residents to register their names with local officials who record deeds. If any documents are filed including those names, the county alerts the resident in question.
There are also paid services that offer similar monitoring. But both kinds of title monitoring can alert a homeowner only after a fraudulent title has been filed — they don’t prevent the crime from happening in the first place.
Once a phony title is filed, the only way to resolve the issue is through a lawsuit to establish true ownership. That typically requires hiring an attorney, ideally one who specializes in real estate law.
According to Fleck, the only true protection against title theft is through a specific type of policy, offered by any major insurer, known as a Homeowner’s Policy of Title Insurance. (This is not to be confused with the similarly named Owners Policy of Title Insurance.)
Insurance can protect homeowners from deed theft. Getty Images
Under covered risks, the policy should include language to the effect of “Someone else claims to have rights affecting Your Title because of forgery or impersonation,” according to a policy template provided by the American Land Title Association trade association.
“All title insurance companies, all the big ones, now offer it,” says Fleck. “Some of them don’t even know they do.”
While traditional title insurance policies protect against fraud prior to the purchase of a property, the Homeowner’s policy adds protection for home title theft after you own the property, says Fleck.
“This is important because if you’re a victim of title theft, a quitclaim deed fraud, or any kind of deed fraud, you just make a claim to your title insurance company, and they handle it for you — and that’s it,” he says.
While insurance also can’t prevent deed forgery in the first place, Fleck says, the right policy will eliminate expense and hassle for the homeowner by putting the onus on the insurance company to resolve the phony title claim in court.
Detroit case shines a spotlight on quitclaim fraud
In the recent criminal case in Detroit, prosecutors say the community organizer Thomas perpetrated a brazen scheme targeting the low-income homeowners she was supposed to help protect.
UCHC, the nonprofit where she works, provides eviction- and foreclosure-prevention assistance by offering free counseling services for income-eligible residents who own or occupy a home at risk of property tax or mortgage foreclosure.
According to a criminal complaint signed by FBI agent Matthew Sluss, Thomas, who is also a real estate agent and public notary, conspired with other unnamed individuals, including another notary and a Wayne County employee, to steal dozens of homes.
A case in Detroit centering on alleged deed fraud is working its ay through the courts. Getty Images/iStockphoto
The victims included a cancer patient undergoing chemotherapy, who in October received an eviction notice ordering them to vacate their home in 30 days. The homeowner contested the eviction, and those proceedings remain ongoing.
“While working in a capacity to provide assistance to residents experiencing financial hardships, Ms. Thomas allegedly exploited individuals in the process of losing their homes,” says Cheyvoryea Gibson, special agent in charge of the FBI in Michigan.
Thomas was charged in a criminal complaint with conspiracy to commit wire fraud, money laundering, and aggravated identity theft.
Her attorney did not respond to a request for comment from Realtor.com®. Thomas is currently free on a $10,000 unsecured bond and is next due in court on May 22.
