Thumbprints Help Reduce Forged Deeds

Ethel Lincoln liked to read the Bible, but at 89 years old and showing early symptoms of Alzheimer’s disease, she couldn’t get to church much. So when a neighbor suggested they study the Good Book together at Lincoln’s East Los Angeles home, she invited him in.

After quickly steering her toward tracts that touch on property matters, the man suggested Lincoln bring out the deed to her house for discussion. Soon he was gone--and so was the document. Also gone may be the white clapboard house Lincoln has lived in for more than 50 years.

Instead of getting religion, Lincoln got ripped off. Using Lincoln’s deed as a guide, the man forged her signature, recorded a new deed and gave himself title to her home.

“Ethel’s terrified that she’s going to be put out on the street,” said Lincoln’s conservator. “This home is all she’s got.” (The elderly homeowner, like all other fraud victims in this story, asked that her real name not be used, for fear of being victimized again.)

For perpetrators of forged-deed fraud, someone like Lincoln--elderly, incapacitated and a longtime homeowner with substantial equity--is an easy mark. Schemers also look for residents who are uneducated or who speak little English. Among the areas most frequently targeted: South-Central Los Angeles, Inglewood, Compton and parts of the San Gabriel Valley.

Forged-deed scams can work in myriad ways. In Lincoln’s case, the neighbor forged her signature on a deed and then sold the house to a third party, pocketing the profits. A more common scheme involves forging the owner’s signature on loan documents, collecting the money and leaving the resident in foreclosure when he can’t repay the note he knew nothing about. A third fraud occurs when a homeowner falls behind on mortgage payments. A person posing as a loan broker steps in with bank documents to “save” the house; what the unsuspecting resident doesn’t know is that the broker has slipped a deed transferring title to the home into the barrage of papers to sign.

Whatever the scam, forged-deed fraud affects hundreds of Southland homeowners each year, plunging them thousands of dollars into debt as they struggle to keep their properties.

But thanks to a pilot anti-fraud project, those numbers are dropping in Los Angeles County. The Real Property Fraud Notification Program, which began a three-year trial run on Jan. 1, 1993, instructs the county recorder’s office to notify homeowners by postcard within 30 days of a deed being recorded on their property.

Normally, residents wouldn’t learn of a fraudulent deed on their home until they were on the verge of foreclosure. By being alerted earlier, a homeowner can stave off foreclosure proceedings and reduce the likelihood that he’ll have to come up with the $5,000 to $10,000 in legal fees it can take to get his home back.

Along with notification, the program also requires signers of deeds affecting real property in Los Angeles County to leave a right thumbprint, not just a signature, in a notary public’s journal. Since the prints of two of the players in real estate transactions--notaries and real estate agents--are already on file, obtaining the property owner’s print closes the triangle. With sophisticated computers able to quickly match single-digit fingerprints to existing police records, few criminals want to leave such hard evidence.

“This program has absolutely exceeded expectations,” said State Sen. Diane Watson, who sponsored the bill establishing the pilot project. “If you’re a property owner, your chances of being defrauded are much slimmer because of our program.” The Legislature will vote by the end of the year on Watson’s bill to permanently extend the anti-fraud program beyond its Dec. 31 expiration date.

Watson expects her colleagues in Sacramento to adopt the measure. In Los Angeles, proponents of the anti-fraud program range from notaries to consumer-affairs advocates to Los Angeles Police Department detectives. Dennis McCraven, Los Angeles County registrar/recorder division chief, says that more than 7% of homeowners who returned a questionnaire sent by his office indicated that they did not know a deed had been recorded on their property. More than 95% of the respondents said they’d like to see the notification program extended.

“I have gotten no calls about forged-deed fraud since the program went into effect,” McCraven said. “It has reduced this kind of fraud to a minimum.”

Notaries Ardi Youngster of Pacific Palisades and Elvin Pate of Arcadia appreciate the added protection the fingerprint provision affords them and their clients. “A signature can be forged, but a thumbprint can’t,” Pate said. “One man told me that if this program had been around years ago, he wouldn’t have lost a second trust deed.”

“It takes only 30 seconds to get a print, so any inconvenience is far outweighed by the protections,” Youngster said.

The anti-fraud program has freed Detective Roy Hunter of the LAPD’s Forgery Division to work on cases involving credit card, check and other kinds of forgeries. “Since this program began, I’ve had only two cases of forged-deed fraud to investigate,” he said. “Normally I’d have 40 to 50 a year. You’d be surprised how easy and simple it is to take someone’s home.”

Lupe Sanchez knows just how easy. The 36-year-old Pomona woman thought she was signing a deed of trust (used as security to obtain a loan) when she borrowed money from a relative. Instead, the relative gave Sanchez a grant deed (used to transfer title to a property) to sign. When Sanchez’s machinist husband lost his job and the couple was unable to pay back the money, the relative recorded the deed, taking ownership of their three-bedroom home.

“I couldn’t believe it when I got the postcard from the county,” Sanchez said. “I thought I was signing a loan document. I had no idea I could lose my home.”

Sanchez contacted the police, who pointed her toward a legal-aid agency, who in turn referred her to the L.A. County Department of Consumer Affairs. A staff member there helped persuade the cousin to deed the house back.

Patricia Reed may not be so fortunate. An investigation is still ongoing concerning the theft of her Baldwin Park home. Reed, who is deaf and mute, lost title to her house when a man forged her signature on a grant deed. When he wound up in jail on unrelated charges, he tried to put the house up as collateral for bail.

“Until we got the county’s postcard we didn’t know any of this was going on,” Reed’s daughter said.

“Requiring people to leave their thumbprints when they record a deed impresses on them that real estate transactions should be taken very seriously, that they had better understand what they’re signing,” said Manuel Duran, NAPIL Equal Justice Law Fellow at the Bet Tzedek legal-aid service.

Tim Bissell, chief investigator for the county Department of Consumer Affairs, agreed that the anti-fraud program provides a valuable lesson for home buyers. “How many times does the average person purchase a home?” he asked. “The language in real estate documents is so arcane that most consumers don’t understand it. This program alerts people if they misunderstood what they were signing.”

Critics of the anti-fraud program contend that its costs--to record a deed the signer must pay a $7 surcharge that funds the sending of the notification postcard--outweigh its benefits. The project’s main opponent, the California Assn. of Realtors, objects to the notification fee, but supports the thumbprint provision.

“[The association] takes a longstanding, principled position against anything that imposes additional costs to transferring property,” said Burt McChesney, the group’s legislative advocate. “We think the post-recording notice will have only a small beneficial effect, but the increased costs of closing escrow could knock people out of the market.”

“That cost-benefit analysis doesn’t hold water,” countered Don Tamura, who heads the L.A. County District Attorney’s real estate fraud unit. “The average real estate transaction involves $150,000. I think most buyers would pay $7 to protect their homes.”

Tamura, though, would like to see some of the surcharge go toward bolstering prosecution of real estate fraud. Currently, $6.28 goes to TRW, which the county has contracted to send out the deed notices; the county recorder gets 13 cents and the county assessor 59 cents.

Duran agrees, noting the urgency of bringing such cases to trial. “The statute of limitations applies in many of these crimes, and the average age of my clients is 80,” he said. “The longer you wait to get the homeowner’s testimony, the worse off his memory will be. Limited resources slow everything down.”

The state Legislature is considering a bill by Sen. Teresa Hughes that would raise recording fees $1 throughout California to strengthen real estate fraud investigation and prosecution. A bill by Assemblyman Cruz Bustamante would make the fingerprint provision of Los Angeles’ anti-fraud project a statewide practice.

Whatever the outcome of those votes, L.A. County officials hope state lawmakers will recognize the value of the notification program.

“This project is not a panacea--it will not stamp out real estate fraud,” Bissell said. “But it has scared some crooks out of the business. . . .”