Non-owner occupied transactions continue to be a target of fraudsters. They do not just sell other people’s properties; they also borrow against them. After all, the money is what they are after. They do not care how they get it or what kind of havoc they wreak to get it.

Monica Stewart, Escrow Officer with Ticor Title in Newport Beach, California, opened a loan only transaction. The property was free and clear of a mortgage. The new loan amount was $322,000, which represented one-half the value of the property being pledged as the collateral for the loan. 

The owner, a limited liability company (LLC), had just one member. The member was located outside the U.S. and planned on signing their loan document at the U.S. Embassy. 

The loan was being made by a private lender who did not check the credit history of the borrower nor credit qualify the borrower in any way, since the loan was being secured by a property worth $644,000. 

All these facts combined requires a closer review on the part of the settlement agent. The articles of organization for the LLC were reviewed and appeared to be in order. Next, Monica performed an internet search of the member which revealed the information provided was for a deceased person. As a result, she resigned from the transaction and never heard from the borrower again. 

Monica reads Fraud Insights every month which provided her with the information she needed to identify this high-risk transaction. In this instance, her file had four red flags:

✓ Non-owner occupied property
✓ Free and clear of any encumbrances
✓ Cash-out loan transaction
✓ Owner located in a foreign country

Monica took what she learned to heart, put it into practice and saved the Company from a potential claim. The loan proceeds would have been more than $300,000. She is one of many everyday heroes. 

Not only did Monica’s efforts protect the Company, but they also protected the equity in the property for the true property owner. For her efforts, she received a $1,500 reward. 

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