As an FBI agent through the 1990s, Art Pfizenmayer investigated title theft.
But it was rare then. Today, it’s a growing problem.
In 2008 when title theft was still uncommon, the FBI posted a notice about this house stealing scam, telling homeowners what to watch out for. A few years later in 2012, the California Department of Real Estate issued a consumer alert about the rising number of fraudulent property deeds and noted that the county recorder is not responsible for verifying the authenticity of the documents being recorded.
Roughly 2 ½ years later, Granada Hills-based Title Lock Corp., a title fraud detection company with an office in Rancho Santa Fe, was founded by Harish Chopra, who also built Data Tree Corporation that is now a part of First American Title. Last year, Chopra recruited Pfizenmayer as its senior adviser. His position is unpaid but he has a minority stake in the company.
According to the website of Home Title Lock, title fraud losses in 2015 in the U.S. totaled more than $5 billion. Title fraud losses per incident on average are more than $103,000 vs. $1,300 for identity theft losses.
“With the advancement in technology, it’s a huge problem and tremendously under reported as a crime,” Pfizenmayer said. “It’s that insidious that somebody can do this so easily.”
He remembers the story several years ago of how a mentally ill man took legal title to Petco Park away from the city and the Padres by walking into the San Diego County Recorder’s Office and submitting a properly filled-out deed transfer. The man created a legal and bureaucratic nightmare that could be perpetrated on homeowners if someone targets them.
That’s why thousands of homeowners spread across 50 U.S. states subscribe to Home Title Lock, which advertises nationally on the radio and cable channels, Pfizenmayer said. Most of its subscribers pay an annual fee of $149 per property. Its monthly subscription fee is $15.
Pfizenmayer declined to reveal company sales, growth statistics and employee count for the privately held 4-year-old business.
Below, Pfizenmayer, 73 and an Encinitas resident, chats about how someone steals your house, who these thieves target and why you should pay for their services even though only a few of their subscribers have had their title ownership fraudulently altered. (This interview was edited and condensed for clarity and space.)
Q. What is title theft?
A. Title theft is when somebody uses a false identify to change ownership on your property title from your name to their name and then secures as many loans as possible using your equity as collateral.
Then what (could) happen is that you spend two years and $50,000 to hire attorneys and experts to show that this is your house and you didn’t execute (the title change). Even if the court says this isn’t your loan and that this is your house, you’re still losing because of all the bills associated with trying to prove that because you don’t have title insurance.
Q. What do you mean? Banks require title insurance when people buy homes.
A. (Banks) want (title insurance) because they don’t want any liens in the past. But going forward (after escrow closes), your title, which is a legal document identifying the owner of record, is not insured. The (banks) don’t care because they are first in line to get paid if something goes wrong. If the property is foreclosed, the (banks) get the money first.
Q. How often did you come across title theft when you worked as an FBI agent?
A. Title investigations weren’t a big deal back in the 90s and earlier. When I retired in 1995 (from the FBI after 26 years) it was on our radar but certainly not a priority.
Today, everything about you is online. They can download documents they need to steal your home. They just need your address. Once they have your address, they can find (your name as) the owner.
They can go online, pay $20 for a notary stamp and get it in two days. In most cases, you have to file in person. But they can give a kid the document to file and the deal is done.
(You may not find out until) the loan goes delinquent. Someone knocks on your door to say your property will be foreclosed because you weren’t paying back the loan you weren’t aware of. The bad guys changed your mailing address so you didn’t get any notices.
Q. Who do these thieves typically target?
A. The big targets a lot of the time are the elderly because they have a lot of equity in their homes, they don’t pay attention to details like missing property tax bills and they make very poor witnesses and the bad guys know it. For example, sometimes it can take two years to prosecute and the elderly victim might not be alive in two years.
Second homes, vacation homes and investment properties are also big targets because people don’t pay attention to the details such as property tax bills, foreclosure notices, past-due notices if these documents happen to get through to the property for some reason. You’re more likely to notice you didn’t get a property tax bill on your primary home vs. a second property in Colorado.
Q. What does your company provide to its subscribers?
A. We have direct access to 6 billion title records in a U.S. database. Our database covers about 97 or 98 percent of all title filings.
Our founder negotiated an agreement where we have exclusive access to this database. Our software monitors that database for our subscribers. We spend hundreds of thousands of dollars on our proprietary software. When you are a subscriber and your title is disturbed in any way, you get an email from us. Shortly thereafter if we don’t get a response from you, we call you.
(If your title ownership has been fraudulently changed,) you need to file an affidavit and notice of false filing with the county recorder’s office. That essentially puts a big red stop sign on that title, warning any lenders that there’s a problem and that they need to tread carefully.
We’ll email that document to the subscribers and get on the phone and walk them through filling it out. They have to get it notarized and take it to the county recorder’s office to file. If they can’t, our company will get someone to take it in to county recorder’s office to file it. It’s not just finding the problem; it’s solving the problem. (None of its subscribers have had a loan fraudulently taken out against the equity of their homes.)
Q. Do other companies offer similar services?
A. There are some little onesies and twosies that go to an individual recorder’s office and work out a software. But all they do is notify their clients.
Q. I already subscribe to an identity theft prevention service. Will these services protect me from title fraud?
A. Nope, unfortunately. Bad guys use a false identity. They are not using your identify. So it doesn’t raise any red flags associated with your identity.
Q. What information does a homeowner need to provide to subscribe to your services?
A. Subscribers just need to give their street address, credit-card number for payment and contact info in case something happens. You can sign up with your phone at Starbucks. You don’t need the assessor’s parcel number, or APN.
Q. You said there have been very few times where your subscribers had their title changed fraudulently. What do you say to someone who asks why they should pay for your services?
A. Why do you have smoke detectors? In case of a fire. It’s the same with Home Title Lock. Your home is your most important asset. It will be a devastating emotional, financial and legal nightmare if title theft happens to you. It’s a road you don’t want to go down when for pennies a day, you can have the comfort of knowing it won’t happen to you.