Clever identity thieves who have enough personal information about someone can wreak havoc with a home’s title. Called mortgage identity theft, these identity thieves typically work in one of two ways.
First, with enough personal information, an identity thief can buy a home and take out a mortgage in someone else’s name. The victim gets stuck with the bill.
Second, an identity thief can use the homeowner’s personal information to transfer the deed for the home to themselves or a third party. Then, they can refinance the house or use the home as collateral for a home equity line of credit. Again, the thieves get the money while the homeowner is stuck with a bill he or she didn’t know about – and doesn’t find out about until it is too late and there is a lien against the property. The home can go into foreclosure.
A title search will turn up any time the deed and title has been transferred to another party. The search will also reveal any liens against a property. A good title company may pick this up and can work with the buyer and seller to clear the title claim for closing to proceed.
Worried about protecting yourself from identity theft? Experts recommend regularly checking your credit and looking for unfamiliar accounts. You’re allowed one free credit report each year from each reporting agency, and it’s worth your time to take advantage of it.