For just under $15 per month, in perpetuity, the legality of your homeownership can be protected from identity thieves.

Really?

Here in California, and most likely elsewhere, in order for a vestee to convey a property title to another person or corporation, a notary has to confirm the vestee's identity.  A signature alone is no longer sufficient.  After the burst credit bubble of 2008, a thumb print also has to be provided.  It's pretty hard to forge a thumb print.

The scammers claim that the title thief can then re-mortgage the property, take the money, and stick you with the bill.  Again, really?  In order for an institutional lender, such as a bank or credit union, to fund the loan, the borrower's title has to be insured.  The seniority of the new lien has to satisfy the lender's requirements when compared to all of the other liens that may be on the property.  The borrower's identity has to be confirmed as well as the borrower's ownership of the title.

How do I know all this?  For the last 26 years, I've been a real estate agent.  I've had to renew my license six times and have concluded dozens of transactions.  And if you don't believe me, Real Clear Investigations published an exposé on this subject a year ago:

How can the scammers continue to get away with this?  For one thing, the threat of being dispossessed can be quite a motivator.  Also, the purveyors of this fraud have enlisted a bevy of popular and credible media personalities as endorsers — including some well accomplished attorneys.

How could a lawyer get sucked into this?  It turns out that most lawyers often specialize in a specific field — and title insurance is particularly unique and exotic when compared to divorce, criminal defense, or medical malpractice.  Many real estate agents are also unclear on the details of title insurance.  I've had several lawyers as clients, one of whom was a real estate lawyer, but her expertise was land use and planning, not contracts and title.  Also, she was a first-time buyer.  When we got the preliminary title report, she flipped out.  "I can't buy this house!  There are already liens on the title."

"Your lender won't fund the mortgage until the old liens are settled in the escrow.  All this report tells us is that the sellers have a mortgage and that the existing property tax liens will be proportionately settled between you and them based on the date of closing.  This report is mostly for the sellers to check for errors."

She looked me in the eye and said, "All right, Mark.  I'll have to trust you."

The particular details of this process vary, depending on location.  Here, in Northern California, the title companies also process the escrows — everything under one roof.  In Southern California, escrow companies handle the settlement and go outside to purchase a title policy.  This is the result of local custom and not law.

On my first listing, I represented myself and my partners as sellers of a commercial building.  The buyer's agent, who was the incoming president of his local board of realtors, advised me to carefully go over the preliminary title report because they put our existing lender all the way down in third position — which couldn't be true.  It so happened that the title company failed to find, in the public record, the complete details of the refinance we did some years previous, so the old loan was still on their books.  I called them up, and they told me they'd issue a new report if we sent them the reconveyances that closed the old loan.  One of my partners gave me the reconveyances, which already had the stamp of the County Recorder right there on page one.  Seriously sloppy work on their end, but the deal still closed.

Image: Chris Dlugosz via Flickr, CC BY 2.0 (cropped).

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