Two incidents have recently occurred in Southern California markets involving Vietnamese imposters. Both resulted in the imposter using an unwitting owner's property as collateral for a cash-out loan.
A cash-out refinance was opened with Chicago Title's San Clemente, Calif. office by a mortgage broker. The borrower in the transaction was Hung Huang, who owned the property free and clear of any encumbrances. When the loan documents arrived, the escrow officer made arrangements to have Mr. Huang meet with an approved notary, and scheduled a 3 p.m. signing appointment at Mr. Huang's downtown Los Angeles office. At the last minute, however, Mr. Huang changed the appointment to 7 p.m. at the restaurant located at the top of the office building. The mobile notary conducted the signing appointment and sent the executed documents back to escrow.
The new lender funded, the loan closed and the escrow officer wired $226,000 to Mr. Huang's bank account. Little did she know Mr. Huang was an imposter!
After close of escrow it was discovered the imposter had walked into a bank to open a checking account for the escrow officer to wire the loan proceeds. The bank teller asked for his identification and social security number. When he presented his identification to the bank teller she photocopied it and informed him he already had an account with the branch. Mr. Huang clearly had identification in the name of Hung Huang, but the picture the bank had on file for the account holder didn't match the man standing in front of the teller. This Mr. Huang was an imposter! The imposter became irritated and uncomfortable, and walked out of the branch.
He then went to a branch of Bank of America and successfully opened a checking account, which would be the account where the $226,000 wire was sent. In the meantime, the teller at the first bank contacted the real Mr. Hung Huang to inform him his identity had been stolen. Purely by coincidence, the imposter had come to a bank where Mr. Huang already had an account, complete with a photo ID on file. Otherwise the imposter might never have been discovered.
The real Mr. Huang checked his credit report and saw inquiries from the lender who made the loan to the imposter. He contacted the lender to ensure they knew the borrower was an imposter. The real Mr. Huang then contacted our corporate headquarters to ensure we knew the borrower on the new loan was an imposter and to remove the new deed of trust encumbering his property from his title.
Upon hearing this information, the compliance officer with FNF's corporate headquarters had Western Region Underwriting issue a bulletin alerting all offices to the fraud involving the real Mr. Huang's property. The Ticor Title office in San Diego saw the bulletin and noticed they had an inactive order opened on the subject property. The title officer performed a date down and discovered a recently recorded deed of trust, which they reported to the underwriting department. The underwriting department found the transaction had closed at Chicago Title's San Clemente office. The underwriter contacted the San Clemente escrow officer who informed them the file had indeed closed and a wire in the amount of $226,000 was sent to Bank of America in Mr. Huang's name just the previous day. FNF's banking administrator worked with Bank of America to freeze the imposter's account.
Unfortunately, Bank of America was only able to freeze $60,000 of the $226,000. The fraudsters had already drained most of the account. We are now processing this matter through the claims department. The claims department is paying off the loan in order to reconvey the deed of trust encumbering Mr. Huang's property.
We were not lucky enough to recover even $60,000 in another incident with the same characteristics. In this incident the imposter was discovered only after the loan went to foreclosure and the real owner nearly lost her property.
Sydney Chiou purchased her property in 2010 for $569,000 in cash – no loan. Approximately five months later a man, using Sydney's identification, opened two bank accounts in her name at Nara Bank and Chase Bank.
The imposter then worked with a broker to find a hard money lender to loan him $325,000 using Sydney's property as the collateral. The transaction closed at Fidelity National Title in San Diego. The documents, however, were signed outside of the office with a mobile signing company. The claims officer investigating this transaction wondered how a man pulled off the signing using Sydney's identification, since Sydney clearly held title as a single woman.
The claims officer contacted the notary who pulled her journal and confirmed she had met with a woman who produced identification as Sydney Chiou. The notary stated the signing appointment was conducted at a local restaurant and the alleged borrower was accompanied by a man. The notary specifically remembered this signing appointment, because the woman refused to speak to the notary even though it was clear she understood English. And, when the notary requested the alleged borrower complete a Statement of Information she reluctantly completed it and misspelled her own name!
At closing, $140,000 was wired to Nara Bank and $156,176.47 (the balance of the proceeds) wired to Chase Bank. Months later, when the new lender received no payments on their new loan, they contacted the property owner – the real Sydney Chiou – who discovered her identity had been stolen in order to perpetrate this fraud.
The lender and the property owner have made claims against Fidelity National Title. The owner claims we should not have encumbered her property and wants the lien removed. The lender has claimed a forgery which is afforded protection under their loan policy. The claims officer has been working closely with the banks and local law enforcement to catch the thief and recover the loan proceeds, but the thief instantly drained the funds in both banks after closing.
Moral Of The Story
The similarities between the two incidents included:
- Borrower was of Vietnamese or Taiwanese decent
- Property was owned free from liens and encumbrances
- The borrower sought to obtain a high-interest/short-term loan
- The lender was a hard money lender
- The transaction involved a broker
- The borrower requested to sign documents at an off-site location (knowing that it would be harder to photocopy or authenticate the driver's license or other forms of identification making the notarization process rushed or manipulated)
Any transaction involving the above traits should be reviewed by management prior to closing to ensure the same scam is not attempted against our Company for a third time.