How to Avoid Real Estate Identity Theft

What Is Real Estate Identity Theft?

Real estate identity theft generally involves someone assuming the identity of a homeowner or another party involved in a real estate purchase. For example, the crook might pose as a homeowner to get the title to the home and either take out a loan against the property or sell the property and pocket the proceeds.

In many cases, a real estate identity theft targets a home with a lot of built-up equity, perhaps one owned by an elderly person.

One way a crook might carry out real estate identity theft is by using spyware or malware to break into someone’s email account and search for information about a real estate transaction. These emails might contain data like the victim’s name, address, Social Security number and banking information. The crook then can use this data to commit real estate identity theft.

Types of Real Estate Identity Theft

A real estate identity thief can take advantage of stolen data in a number of ways, such as:

• Selling an occupied home: In this case, a thief uses a homeowner’s information to forge documents and put the property deed under their name. After that’s done, the crook can sell the house and swipe the sale proceeds.
• Applying for a mortgage in someone else’s name: After stealing someone’s identity, the fraudster might apply for a mortgage in that person’s name. If the application is approved, the thief then might sell the home to an investor who’s in on the scam and score a profit.
• Refinancing a home: An identity thief might use stolen data to buy a home, then tap into the home’s equity by taking out a cash-out refinance loan.
• Gaining equity through a home equity loan or home equity line of credit (HELOC): Another way to squeeze equity from a fraudulently purchased home is to take out a home equity loan or HELOC. As with a refinancing, a home equity loan or HELOC can put thousands of dollars in the pocket of someone posing as a homeowner.
• Forging a deed for a vacant property: An identity thief may focus on a vacant property, such as a vacation home, instead of an occupied property and forge the deed using stolen information. This may happen more often if the owner of a vacant property has died. Among the ways a thief might monetize the property is to rent it out.
• Impersonating a real estate agent: Some identity thieves target real estate agents rather than homeowners. Using an agent’s stolen information, a thief might trick a homebuyer into paying fees for a transaction that’ll never happen.

How to Avoid Real Estate Identity Theft

To avoid real estate identity theft, take these steps:

• Update security software. Be sure the latest security software is installed on your computer and other electronic devices. This can help prevent identity thieves from gaining electronic access to sensitive information.
• Beef up your passwords. You should use strong, unique passwords for all your accounts. A password should be a mix of letters, numbers and characters. Several online tools are available to generate strong passwords.
• Use multifactor authentication. Multifactor authentication uses a secondary method to verify your identity before you can sign into an online account. For instance, you might be asked to provide a one-time PIN that gets texted to you.
• Check your credit report regularly. Reviewing your credit report on a regular basis can alert you to suspicious activity, such as an unauthorized HELOC that was taken out in your name. Consider signing for Experian’s free credit monitoring service, which notifies you when changes show up on your credit report.
• Consider buying title insurance. When you’re buying a home, a lender typically requires the purchase of title insurance to protect their interests. A homeowner also can buy optional title insurance after they’ve wrapped up a purchase. This type of insurance can pay legal fees and other costs if fraudulent claims pop up regarding ownership of your home.
• Stay up to date on common scams. Be aware of the latest scams being carried out by identity thieves. The Better Business Bureau, the Federal Trade Commission (FTC), state attorney general offices and other organizations frequently publish alerts about identity theft scams.

What to Do if Real Estate Identity Theft Happens to You

If you’re the victim of real estate identity theft, follow these six steps:

1. Contact the lender. If you believe scammers have used your information to take out a mortgage loan in your name, alert the lender.
2. Change passwords. If you suspect you’ve been a victim of real estate identity theft, change your login information for financial accounts, such as mortgage, bank and credit card accounts.
3. Report the identity theft to the FTC. You can file an identity theft claim by calling the FTC at 877-438-4338 or visiting IdentityTheft.gov.
4. Activate a fraud alert. You have the right to add a fraud alert to the credit reports maintained at all three major credit bureaus—Experian,TransUnion and Equifax. Whichever bureau you contact will inform the other two so the alerts will appear on all three of your reports. You can visit Experian’s Fraud Alert Center to add an initial security alert. You also can call 888-EXPERIAN (888-397-3742). Fraud alerts will instruct those who view your credit report for lending purposes to verify your identity before issuing credit in your name. Be sure to also check your credit reports for any suspicious activity.
5. Look into a credit freeze. You also have the right to request a credit freeze, also known as a security freeze, which is a step beyond a fraud alert and limits access to your credit report. If you want to place a freeze on all your credit reports, you’ll need to do so individually with each credit bureau. A freeze will remain until you choose to lift it.
6. Consider filing a police report. Alerting the police can assist in an investigation and make it more likely the perpetrator can be caught. A creditor or other entity may also ask you for a police report.

The Bottom Line

Being victimized by real estate identity theft can be scary. After all, we’re talking about one of the most valuable things anyone can own—a home. Fortunately, you can do a lot to protect yourself against real estate identity fraud, such as strengthening your account passwords and regularly checking your credit report. You can check your Experian credit report anytime at no cost.