In the news ...   Friday, September 21, 2012

Alert!  Fraudulent Loan & Short Sale Scam


We have recently been notified of a new type of fraud involving short sales. The elements of the fraud are described below:

1.    There is an existing first lien mortgage securing a loan from an institutional lender.

2.    A new fraudulent mortgage is recorded. The fraudulent mortgage has no title company identifiers and appears to be uninsured. The lender shown on the fraudulent mortgage is a private lender not an institutional lender.

3.    A fraudulent release of the first lien mortgage is recorded.

4.    A few months after the fraudulent mortgage is recorded, we are asked to insure a short sale where the purported new lender on the fraudulent mortgage is accepting less than the amount owed.

5.    The lender holding the first lien mortgage, which was actually never released, starts foreclosure.

The fraudulent mortgage is often signed by the owner as part of a foreclosure rescue scam, but of course there is no actual loan and the first lien mortgage was never paid.

The release is a very good forgery and gives the illusion that the fraudulent mortgage was a refinance of the first lien mortgage. Below are red flags that can help you identify this type of fraud.

http://www.oldrepublictitle.com/vanational/newsletter/littleredflag.jpgRed Flag #1

The new fraudulent mortgage appears to be uninsured.

http://www.oldrepublictitle.com/vanational/newsletter/littleredflag.jpgRed Flag #2

The new lender on the fraudulent mortgage is a private lender.

http://www.oldrepublictitle.com/vanational/newsletter/littleredflag.jpgRed Flag #3

The lender is allegedly agreeing to a short sale only a few months after making the loan. Short sales typically do not involve recent loans.

If you are asked to insure a short sale where the loan was made within the last two years please be cautious of these red flags indicating a possible fraudulent transaction and do not hesitate to contact underwriting for assistance.



Please contact the underwriting department at Old Republic Title with any questions
or give us a call at 610-251-1160 or 800-842-2080. 


To unsubscribe to this newsletter, please click here. 



1200 Liberty Ridge Dr.

Suite 100

Wayne, PA  19087

(610) 251-1160

(800) 842-2080

(610) 644-1408 - fax


Calder Square

P.O. Box 10326

State College, PA  16805

(814) 238-3600

(814) 238-3604 - fax


790 Holiday Drive
Third Floor
Pittsburgh, PA 15220
412-921-6417 - fax


32 The Green

Dover, DE  19901

(302) 734-3570

(800) 722-0784

(302) 734-3254 - fax


920 N. King Street

Suite 414

Wilmington, DE  19801

(302) 661-1997

(302) 661-1996 - fax


Columbia Corporate Park

8840 Stanford Blvd.

Suite 4500

Columbia, MD  21045

(410) 953-6763

(800) 664-8306

(410) 953-6761 - fax


9303 Center Street

Suite 101

Manassas, VA  20110

(703) 365-2300

(800) 232-6817

(703) 365-2400 - fax


1245 Mall Drive
Richmond, VA 23235 (804) 897-5499

(804) 897-9679 - fax




1800 Bayberry Court

Suite 104

Richmond, VA  23226

(866) 232-2021

(804) 282-0865- fax


Old Republic Title Update is published by the Mid-Atlantic Area Office of Old Republic National Title Insurance   Company in an effort to provide information relative to our industry on a timely basis. None of the materials included in this publication should be deemed legal or underwriting advice or should be acted upon without prior consultation with your underwriter or counsel.