All the Classic Signs

By Lisa A. Tyler
National Escrow Administrator

Welcome to the seventh edition of Fraud Insights, your source for the latest stories about fraud and forgery in the real estate industry and more importantly, your source for tips and tools about the prevention of fraud and forgery in your own transactions.

Forgery is one of the hidden risks that title insurance covers. This crime is frequently characterized as "white collar crime" and as such receives less attention from law enforcement agencies than other, more visible types of crime. The lack of attention by law enforcement agencies and their difficulty in proving forgery has led to a significant increase in forgery claims for the Company and the title insurance industry as a whole.

As a result, the Company has established a reward program for the detection of forgeries. This program is a significant commitment by the Company to encourage all employees to become more vigilant in the detection of such matters and the prevention of losses occasioned by such crimes.

Incidents of heroics by employees who derailed crime in their transactions should be reported to the National Escrow Administrators via e-mail at or telephone at 888.934.3354. Heroic employees are selected on a monthly basis to receive rewards based on their efforts to protect the Company against claims and losses.

Speaking of rewards! Congratulations to Gay McGough, an Alamo Title Escrow Officer in Arlington, Texas. She is this month's $500 reward recipient. Gay used her gut instincts and recognized all of the classic signs of a less than honorable seller and was able to uncover two unpaid liens, one to the state and one to the IRS. Read all about it in this issue of Fraud Insights!

Find out how a former bank teller turned escrow employee was able to spot a fake identification in her transaction in the article "Is It Genuine?"

In the June edition, we provided a "Forgery Prevention Checklist" for your use in detecting fraud and forgery in your own transactions. This month we share "Red Flag Warnings" that were received by one of our Company's seasoned escrow officers who prevented forgery in her own transactions.

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If you attempted to print previous editions of this electronic newsletter and were unable to capture the full content, please note the printing issue has been resolved beginning with this edition of Fraud Insights.

In the Nick of Time

Time is money and TIMING IS EVERYTHING!

A classic "red flag" in the escrow/closing business is when a seller wants you to "rush" to close a sale. Sometimes it can be confusing as to why you are being asked to "rush" a deal. People buy and sell quickly all the time due to an event that can create a legitimate and dire need to close fast or requires them to have to sell by a certain date.

Technology has enabled our industry to perform closings at a much quicker pace than years before.  The double edged sword is that while improved technology enables us to close quicker, the public now expects a faster turnaround.

However, sometimes you might find yourself with one of those good, old-fashioned "gut" feelings that a particular seller has a less than honorable motive to close quickly.  That was the experience of Gay McGough, an Alamo Title Escrow Officer in Arlington, Texas. In her particular transaction, Mrs. Seller kept the phone lines hot between her and her agent, our closing office, the buyer's agent and the lender in an attempt to expedite the transaction.  Not only was Mrs. Seller driving everyone crazy via telephone, she would "drop in" to the title company for updates.  When the title work came in and showed one mortgage loan on the property and a state tax lien, Gay called Mrs. Seller to obtain the mortgage payoff information and to inquire about the state tax lien.

Mrs. Seller quickly denied the state tax lien. Since the sellers had a common last name, Gay thought perhaps the lien was very possibly someone else's with the same name.   Gay then asked Mrs. Seller for the mortgage payoff information including the sellers' social security numbers.   Mrs. Seller said she'd have to call back with the information.

After a few more attempts to get the payoff information, Mrs. Seller told Gay that she had ordered the payoff statement and requested that it be faxed directly to Gay at the title company.

At closing, the sellers signed and swore to an Affidavit of Debts and Liens denying any outstanding monies owed to anyone other than their mortgage lienholder. Then Gay presented them with a copy of the state tax lien that Mrs. Seller had previously denied. Upon examination at the closing table, lo and behold, the lien just happened to contain the social security number Gay had received from Mr. Seller just moments before!

Gay stepped out of the closing and quickly called the Office of the Secretary of State and was transferred to the Fraud Division.  Apparently, several years earlier, Mr. Seller had collected unemployment benefits while collecting paychecks from a new subsequent employer.  The Office of the Secretary of State was glad to have received the call from the title office because with penalties and interest, they would collect twice the amount of the original lien.

When confronted, the sellers tried to make up some song and dance about never receiving notification of this old lien. Incidentally, the sellers told Gay they had sold the property and nothing was brought up to them about the lien.  Gay mentioned it could have been a timing issue and the other title company who closed that particular sale could have missed the lien.

Gay began to see a pattern here and a glaring flaw in the sellers' integrity. She knew she had to have the sellers' names, driver's license numbers and social security numbers checked again before the deal funded.  After four frantic e-mails to the plant, Gay finally got a call just in the nick of time from an examiner instructing her to shut down the deal…the plant just discovered a Federal Tax Lien of record on which the sellers' names, socials and property address were listed!

The principal amount due on the Federal Tax Lien was more than $45K.  Gay was able to quickly contact the IRS for a payoff of the lien.  With penalties and interest, the sellers owed the IRS approximately $3,500 more than they were to net.

Gay convinced the sellers to pull money out of savings and deliver it to her in the form of a cashier's check so she could combine it with their "would have been" net proceeds to release the liens completely. Believe it or not, the sellers complied and the certified funds were promptly delivered to the IRS! 

Our Company would have certainly suffered a loss of the amount due to the IRS, had Gay just relied on the Affidavit of Debts and Liens. But, the title examiner called just in the nick of time to report the discovery of a Federal Tax Lien. Timing is everything, but moreover Gay's efforts are to be commended with a reward from the Company in the amount of $500!


Is It Genuine?

A former bank teller spots a fake identification using the hologram.

Brianna Kirby with Ticor Title in Phoenix, Arizona used to work as a bank teller and has extensive training in spotting fake identification cards. Recently someone in her office was presented with a driver's license that was questionable. When she moved the license, the hologram on the front did not move. In order to be sure she was holding a fake license, Brianna called the Motor Vehicle Division and was able to confirm the license was in fact a fake.

Brianna saved another employee from relying on false identification to notarize closing documents and saved the Company from a possible future claim due to forgery. Great job Brianna!


Red Flag Warnings!

One of the Company's most seasoned escrow officers recently submitted some "Red Flag Warnings" she has used to detect and prevent forgery in her own files.

When it comes to detecting forgery, there are no hard and fast rules that apply. However, the following "Red Flag Warnings" may indicate a possible forgery and should be further investigated by the escrow closer or reported to management:

  • Self-employed or 100 percent financed transactions
  • Unwillingness of a principal to come in to sign
  • No one from our office ever directly communicates with one or more principals to the transaction
  • Use of a notary not designated by the escrow company or lender
  • Good faith and down payment funds paid outside escrow
  • Elders and non-English speaking principals who do not understand the transaction
  • Transactions involving a sale price that is significantly below market value
  • Transactions between principals without a real estate agent or an attorney
  • No public listings for the employer
  • Little or no funds from the buyer coupled with one or more of the above Red Flag Warnings

Do you have additional Red Flag Warnings to share? We would like to hear them. Please submit your tips, tricks and Red Flag Warnings to us at or call us at 888.934.3354. Our operators are standing by!