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Old Republic Title Insurance Company reports seeing a number of claims in Florida emanating from forged deeds on foreclosed, bank-owned properties. The forged deeds are into trusts and the transaction insured is the one out of the trust. Florida is ripe for this scam as the properties may sit in bank REO for many months prior to sale.
The sequence is as follows:

  • First, the property is foreclosed, bank-owned property.
  • A special warranty deed (not a quitclaim) deed is recorded, purporting to be from an officer of the lender, often notarized by a South Carolina notary
  • The grantee is a trust (not a trustee of a trust).  The property is not necessarily “flipped” right away; sometimes it remains in the trust for several months.
  • In all cases so far, only minimal doc stamps are paid.

Because it is easy to vary the name of the person acting as an officer of the lender and the grantee, this type of scam does not lend itself to our usual “red flag” process. It does require vigilance on the part of the lender and the title agent. The most consistent indicia of a fraudulent deed are that the grantee is a trust and only nominal stamps are paid for the transfer to the trust.

If you suspect an REO deed in your chain of title is fraudulent, please check with the actual lender (not the office or officer appearing on the deed) to confirm the validity of the deed; you may also direct your questions and concerns to The Fund’s Underwriting Department at 1-800-432-9594.