It is true, some settlement agents have access to and know how to complete the blanks in a deed template. However, that does not give them approval to prepare deeds for any and all reasons.

Settlement agents are only authorized to complete deeds to consummate real estate transactions which may include title clearance matters. It is crucial settlement agents identify appropriate and inappropriate requests. 

This story demonstrates how the preparation and recordation of a “correction deed” could have lent credibility to an elaborate scheme the perpetrators were committing. 

The transaction was a loan only transaction for $375,000. The lender was a family trust, but the loan was being originated by a mortgage broker and a real estate agent. The real estate agent presented a demand for $12,000, representing his consultation fee. 

Cathy Clark, Sr. Commercial Title Officer, worked on preparing the Preliminary Report. The search revealed that TNF, LLC acquired the property from a fraternity in 2021. That fraternity owned the property since the early 70’s. 

Two months after TNF, LLC acquired the title, a “correction deed” was recorded changing the owner to Totally Not Funny, LLC. The correction deed was recorded as a courtesy by another title company. 

A year later, the property was transferred by a gift deed to Joe Kerr and Lou Zar, the borrowers. The deed was prepared by the real estate agent who was charging the consultation fee. None of the recent deeds were recorded as a part of an insured transaction, so uninsured deed affidavits were required prior to the Company agreeing to insure the lender’s lien. 

In addition to the uninsured deed affidavits, Cathy required that the borrower obtain the authority documents from the fraternity for review to confirm the authorized signer had approval to transfer title to the LLC. 

There was also a deed of trust in the amount of $260,000 which was not insured by a title company. The beneficiary was a private family trust. The real estate agent indicated the new loan would be subordinate to the existing lien. 

The organizational documents were provided. The deed was signed by the president of the fraternity, yet the individual who signed was not named anywhere in the fraternity’s organizational documents. 

Instead, the organizational documents reflected another individual as the sole owner of the fraternity. That individual had the same last name as the real estate agent who was one of the originators. 

Cathy escalated her findings to MaryPat Noeker, Vice President, National Underwriter. MaryPat dug in and carefully examined Cathy’s findings. She compared signatures found in the chain of title and identified some discrepancies. 

Cathy searched other public records and found other transactions with similar characteristics including one property which had two liens, where the beneficiaries were individuals, yet the building was abandoned and boarded up. 

The property was subject to an enforcement action by the local authorities for the dangerous building present on the property in addition to outstanding utility liens. Nothing was adding up and the documents did not provide any logical answers. 

The Company elected to resign from the transaction. As a result, Cathy Clark and MaryPat Noeker shared the $1,500 reward for their co-efforts in identifying a transaction with so many red flags.

Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
Fidelity National Title Group
National Escrow Administration