Indiana’s attorney general is warning about a mortgage fraud scheme in which criminals exploit a loophole in state law to transfer the ownership of properties.
Attorney General Greg Zoeller said the thieves aren’t interested in the property they steal, but in using their “ownership” of a property to obtain a fraudulent loan. Once they get the money, they disappear with it and leave the true property owner with the debt.
“The actual homeowners, through no fault of their own, are at risk of losing their home to foreclosure,” Zoeller said. “Correcting the problem and clearing the cloud off the title could cost the homeowners thousands of dollars.”
Zoeller joined the Indiana Recorders Association and the Association of Indiana Counties in Indianapolis on Thursday to publicize the scheme. He explained that Indiana law does not allow county recorders to demand proof of identification from customers who are recording deeds and other notarized documents.
“Criminals are exploiting a loophole to fraudulently transfer ownership of properties in an effort to steal money from lenders,” Zoeller said during the announcement.
Allen County Recorder John McGauley said the state’s recorders are looking at legislation similar to a law in California that would require a thumbprint along with a notarized signature. A similar requirement takes effect in Illinois this summer.
Timothy Reiniger, executive director of the National Notary Association, said his group backs the idea. He said it has dramatically reduced fraud in states where the idea is in place.
The Journal Gazette detailed the ease which with criminals can exploit the loophole earlier this month. The newspaper was able to prepare a fake deed transferring ownership of the 300-foot-tall Lincoln Tower in downtown Fort Wayne in less than an hour.
The building’s new owner was identified as Johnny Appleseed on the document, which McGauley, the county’s recorder, said his office would have no choice but to accept.
The newspaper did not record the document and left off key pieces to ensure it could not be recorded, so the tower’s ownership was never in jeopardy but the example showed how easily the crime can be carried out.
Information from: The Journal Gazette, http://www.journalgazette.net
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