Thursday, July 08, 2010

Property Fraud Alert

A friend dropped off a pamphlet he picked up at the Hillsborough County (NH) Registry of Deeds that describes a service called Property Fraud Alert. Hillsborough and most of the other New Hampshire registries have partnered with a company called Property Fraud Alert to provide a service that notifies homeowners any time a document containing the homeowner's name is recorded at the registry of deeds.

The intended purpose of this service is to tip off the homeowner if a fraudulent deed or mortgage is recorded. It has never happened in the Middlesex North District (as far as I know), but the scenario works something like this: A wrong doer drafts a deed that purportedly conveys your house from you to co-conspirator, forges your name and the acknowledgement and then records the deed. Using that deed as evidence of ownership, the wrongdoer then applies for and obtains a mortgage. He pockets the proceeds of the mortgage and never makes any of the monthly payments. That lender then initiates foreclosure proceedings against the home (which you're still living in) and the first time you know anything about it is when there's an auctioneer on your front porch chanting "going once, going twice . . ."

Now basic real estate law says that a forged deed conveys no title so you would still be the owner of the property, but you would still have the burden of proving that the deed was fraudulent which might put you to considerable expense (not to mention stress and aggravation). This notification service, if it worked the way it is intended to, would have sent you some type of notice when that fraudulent deed was recorded, giving you a head start in getting it cleaned up and perhaps even catching it before the bogus mortgage was recorded.

This issue arose last summer when the AARP magazine published an article about the risk of fraudulent deeds. My own opinion is that because the incidence of this kind of wrongdoing in this part of the country is so rare, the likelihood of "false positives" and the harm they would cause outweigh the possible benefits. By false positive, I mean a routine (and legitimate) document that would trigger a notification that might in turn cause needless stress and anxiety to the homeowner. But that's all subject to change depending on the circumstances.

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