Hair Raising Stories from Across the Nation

By Lisa A. Tyler
National Escrow Administrator

First, thanks to all of you who have taken the time to submit your heroic stories of how you and others have gone the extra mile to protect the Company - and the public it serves – from real estate fraud. Second, if you haven't been a money winner yet, don't give up – we are still reviewing submissions and might be contacting you soon.

Congratulations to Charlotte Martinez from Chicago Title's Alameda County, California operation. She is this month's $500 reward winner for her contributions toward protecting the Company and her customers from insuring a forged deed in the chain of title. Read more about her personal heroics in the story, "Charlotte's Web," in this edition of Fraud Insights.

"Take the Money and Run!" describes the dangers of duplicate wires. This story will make any escrow officer cringe. It is an ugly, but true story.

The next story, "No Income Verification Loans," covers a controversial topic regarding employees. Read about two employees who individually had been encouraged to show inflated incomes on their own personal real estate loans. Read the Company's position regarding this type of mortgage fraud.

Feedback from the Field…

I absolutely love the feedback this eNewsletter generates. Here are a few of the latest tips I have received from the field, which I thought you might find interesting and useful.

Claudia M. Graham, commercial claims counsel, gives the following advice: "Never conduct a closing in a truck stop, Denny's® or a Whataburger®!" All three were actual closing locations in prior claims cases. It might sound funny at first, but think about the risk you put yourself in by conducting business outside of the office with parties who are typically unknown to you.

Dick Bales from our Chicago Title Operation in Wheaton, Illinois shares this tip:

"As you may know, Donald Cole sent out a memo dated October 7, 2005, detailing new procedures in fraud prevention.  In the memo he made the following statement: 

If the seller, buyer or third party presents to you at or prior to closing a release for an uncancelled loan, you must contact the lender for confirmation that the loan has been released.  Use independent means to obtain the lender's telephone number.  Do not rely upon a number supplied by the parties to the transaction.

I have discovered my own helpful 'independent means' to verify a lender's phone number. If an owner provides you with a phone number, consider going to Google and typing in the phone number with the area code.  For example:  630-555-5555.  If this is a 'real' business phone number, chances are great that Google will give you information to confirm the validity of the phone number."

Do you have any helpful tips or ideas used to combat fraud you would like to share with your colleagues? If so, please e-mail your comments to We look forward to hearing from you soon.

Charlotte's Web

A commercial escrow officer deals with a suspicious seller and catches a forged deed in her web!

Charlotte, one of the Company's finest escrow officers, was handling a sale escrow transaction that was opened by a licensed broker, one of her "good clients" who was also the purchaser in the deal.

From time to time the seller's representative came into the office accompanied by a woman whom he referred to as the person "who signed for the seller." Whenever Charlotte asked questions regarding the details of the transaction, the representative was extremely evasive. Due to the behavior and some additional comments by the seller, Charlotte felt suspicious about the Grant Deed that had been recorded only a month prior to her escrow opening.

Determined to investigate further, Charlotte obtained a copy of the Grant Deed. She contacted the title company shown on the deed as the "recorded at the request of" and asked for the notary named on the deed on the slight chance that the notary worked for the other title company. Sure enough, the notary was an escrow officer at the other title company. Charlotte asked the notary about the authenticity of the grantor's signature on the deed. The escrow officer at the other title company was shocked there was a recorded deed, since she still had the original signed and notarized document in her file. The other escrow officer had been instructed by the grantee (buyer) on the deed not to record the document, and furthermore, was instructed to cancel her transaction altogether.

You guessed it! The grantees on the recorded deed were representing themselves as the lawful owner and seller in Charlotte's transaction. To make matters worse, the recorded deed appeared to have been insured by the other title company, even though it wasn't, because it showed the other title company as the "recorded at the request of" party.

By following her initial instinct that something was wrong due to the odd behavior and comments by the seller's representative, Charlotte was able to gather the facts needed to finish weaving her web and catch the forged deed. Now that the other title company was aware of the forged deed and could take measures to prosecute the party that forged it, Charlotte was able to resign from her transaction. She saved the Company from future claims by taking the extra steps to validate her suspicions, and for that the Company has rewarded Charlotte $500!


Take the Money and Run!

To some, being a good wife means being supportive. To this wife, being a good spouse means committing fraud.

A wife was selling her and her husband's home in Orange County, California. The wife was listed as the sole and separate property owner. At closing, the escrow officer initiated an outgoing wire for seller's proceeds. The fax machine at the bank was busy, so the escrow officer's fax machine held the number in memory and continued dialing. What a great feature, right? After a few hours the escrow officer still had no fax confirmation.

Since there was no fax confirmation, the escrow officer faxed the wire authorization to the bank again just before cutoff time. This time the fax went through, and upon receipt, the bank initiated the outgoing wire. However, later that day, the same wire authorization went out a second time from the fax memory.

The bank received the second wire authorization form, but couldn't process the request until the next day. The bank called the escrow branch in the morning when they realized the wire was a duplicate of one that had been processed the previous day. Reaching the escrow assistant, the bank asked if the wire authorization was valid, and the assistant, unaware that the wire was a duplicate, confirmed the wire and it went out a second time.

Instead of notifying the bank of the error, the wife siphoned the duplicate wire (which was more than $93,000) to a new account at a savings and loan. Within two weeks, the money was gone from the new account.

One month later the escrow branch discovered the duplicate wire during the reconciliation process. The duplicate outgoing wire was shown as an exception on their reconciliation report. They attempted to contact the seller for reimbursement, but the seller was long gone.

The Company was forced to hire a private detective to track down the seller and obtain repayment of the funds the seller unjustly obtained. The private detective tracked the wife to Utah by tracing her back to a credit card she was using. The detective interviewed the wife's sister who said her sister was submissive to her crooked husband.

The Company filed a complaint and legal summons against the wife with the Utah court system. The wife claimed she was unaware of the duplicate wire mix-up and she was under the impression that both wires totaled her net proceeds.

Due to her denial, the case went to a jury trial. The escrow officer was called to testify in court that the seller came in to get her closing statement and was fully aware of the amount of proceeds due to her at closing. On the last day of the trial, the wife did not show up in court.

Upon completion of the trial, a civil judgment was granted in favor of the Company. The judge in the case has issued a warrant for the arrest of the wife, who has come up missing again. This game of chase has gone on for four years and the fugitive wife has still not been found.

All of this could have been avoided by implementing standard accounting practices, such as balancing the outgoing wires report from the escrow system against the outgoing wires report from the online banking system. The reports should be compared and balanced at the end of each day to protect the Company from duplicate outgoing wires to thieves like the one mentioned in this story.

Share this story with the people in your operation who are responsible for the daily bookkeeping and make sure they put the suggested steps in place to ensure your office doesn't get caught unjustly enriching someone from one of your closings.


No Income Verification Loans

These stories represent a controversial topic involving our employees and their integrity. Believe it or not, these situations have come up more than once in recent months.

One of our county managers reported that an employee was refinancing her home and had overstated her income to the lender. The county's escrow administrator was closing the transaction on behalf of the employee. When the administrator received the loan package she discovered that our employee had grossly overstated her monthly income on the loan application.

The escrow administrator checked with her human resources director and discovered the lender never contacted the Company to provide income verification. The escrow administrator called our employee into her office. Our employee explained she was getting a no income, no asset verification loan. She further explained that she and her boyfriend lived together, but he had a poor credit rating. Her mortgage broker told her to report her boyfriend's income on the loan application as her own, since they lived together.

The escrow administrator explained to our employee that she was the only applicant and borrower. Even though the lender would not require income verification, it was not appropriate to overstate her income. The employee told her manager she was uncomfortable with the overstatement, but the mortgage broker assured her this was acceptable. The administrator returned the loan documents unsigned and requested the employee to properly disclose her earned income to the lender prior to drawing new documents.

In a separate incident involving the same basic facts, an employee inflated her annual income on her loan application. The overstatement was discovered at the time of signing. The escrow administrator refused to close the transaction. The employee proceeded to close the transaction at one of our competitors and then demanded that our Company reimburse her closing fees, since she would not have otherwise incurred closing costs if our Company had not refused to close her deal.

In both instances the employees were not involved in the closing of their own transactions, which is in compliance with Company policy. In both instances the employees overstated their incomes, which is willful participation in committing mortgage fraud. The Company and its employees are considered professionals in our industry and as such are held to a higher standard than the public. It is our Company's policy to protect our lender customers and for our employees to always act with the highest degree of integrity, both personally and professionally. Participating and perpetrating mortgage fraud through overstated income is grounds for termination at our Company.