- July 01, 2013
- All Issuing Offices
- CLAIMS AVOIDANCE - Conveyance Scam Involving Recently Foreclosed Properties
This bulletin alerts you to a conveyance scam involving recently foreclosed properties owned by Fannie Mae and Freddie Mac. Although the reported incidences relate to these two Government Sponsored Enterprises (GSEs) and the properties are located in South Florida, the scam may be undertaken anywhere and may affect properties owned by any institutional lender.
In Florida, following a foreclosure sale, the clerk issues a Certificate of Title identifying the purchaser at the foreclosure sale, and title passes to such purchaser. These Certificates of Title are filed and available to the public. It has been reported that, in multiple occurrences, after a Certificate of Title has been issued in the name of a GSE, but before the property is marketed for sale, forged warranty deeds have been recorded purporting to convey the title from the GSE to an initial grantee. In contrast to customary practices, this first fraudulent deed may purport to convey the property to the original lender named on the foreclosed mortgage. A second forged deed purports to convey the property to a different grantee, which may be a trust, other entity or an individual. This second fake grantee thereafter sells the property to an uninvolved third party buyer, pursuant to a third bogus deed.
The forged deeds are apparently of high quality, copying the names, signatures and notarizations from authentic recorded deeds.
The scheme is revealed when the GSE/owner markets the foreclosed property.
Please be vigilant regarding this scam. If a GSE or other institutional lender appears in the chain of title as a recent owner of a property – pursuant to a recorded deed, Certificate of Title, or other foreclosure proceeding - and if the property is being resold within a short time following the foreclosure, particularly if there are multiple interim conveyances involved, it is prudent to attempt to verify the legitimacy of the prior conveyance(s) by contacting the foreclosing party, their attorneys, the prior grantor(s), and/or the prior title company, if any. The inability to confirm a key aspect of any of the post-foreclosure conveyances may be a clue to the perpetration of the scheme. Both GSEs maintain listings of properties for sale on their websites, and these may be a source of additional information.
As always, please obtain and retain good copies of government-issued picture identification for all signers of closing documents.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
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