In many ways The Reincarnation of Bonnie & Clyde is a tale of bank robbery. Instead of walking into a bank wielding a gun, the modern day bank robber uses Real Estate.
Much like the romanticized movie version of Bonnie & Clyde’s true life crime spree, I’m leaving out details because this case is presently under investigation by the FBI. What’s more I simply don’t think like a larcenist; a prerequisite for understanding the nuances of the crime I’m about to share with you.
The somewhat slow and murky work day, now commuted to early evening, hadn’t done much to help me toward my personal goals. Business was dragging as it frequently does near holidays. Tired and just hungry enough to be skeptical, iPhone alerted me to an e-mail with the familiar ‘ding’.
The e-mail, from a Real Estate Agent, simply read, “I need a Prelim on these two properties.”
A Prelim, short for Preliminary Title Report, is an extensive search on a subject property, sometimes going back 30 or more years, to determine the rightful owner without so much as a drop of ambiguity. There can’t be any unexplained breaks in the Chain of Title, liens, judgments, etc. As long as there’s no discourse a Prelim is an offer from the Title Company to insure the property. The Prelim is often the most time-consuming and expensive cost to the Title Company which, if a policy is purchased, is rolled into the cost of that policy. But if a policy isn’t purchased the now lame-duck Prelim is nothing short of a non recoupable elephant expense.
A request for two Prelims coming from one agent can be cause for joy but in this case (I know this particular agent doesn’t normally do that kind of business) it was cause for question. I asked Siri to call the agent and like a faithful secretary she dialed the number for me. After a few simple and friendly questions I took a deep breath and ordered the Prelims. Maybe the day had been worthwhile after all.
Not so fast there sizzle britches.
Within a few days the Real Estate Agent was asking me odd questions. And I had a few questions of my own. For one thing, why was there an opened order from another Title Company on one of the two properties I was asked to search?
It took awhile to understand what was going on. In a nutshell one of the two properties had just sold but was up for sale again. The other property was up for sale too but not having been flipped. Another odd occurence, why was the lender on the first property calling the original owners demanding payment? None of this made sense.
The Real Estate Agent who ordered the Prelims kept telling me the bank who loaned money on the first property was calling the original owners, demanding payment, or the bank would foreclose. But wait. Everyone knows when you sell property all liens, loans, judgments, etc., must be paid off or cleared before the property can transfer to new ownership. So why would the “old” bank be asking for payment after the closing?
I asked the Real Estate Agent why they used a smaller off-beat Title company on the first sale. Why didn’t they just call me in the first place? This agent always uses me and I was a little surprised to see I’d been left out of the first transaction. The Agent explained the Escrow company had demanded they use the smaller Title company. Red flag. Escrow can recommend but not demand the use of a specific Title Insurance company.
Exasperated I suggested the Realtor drive to Escrow and find out what was going on.
The next phone call I got from the Real Estate Agent was sobering. The Escrow Office was shut down. Closed. Gone. Packed up and moved out. History. See ya!
Here’s what happened.
Fake Escrow gets a license for two months, opens an office, takes in as many orders as possible, directs payoff funds from legitimate banks (the new lender) to a fake lien holders (the supposed old lender), grabs the money and books out-of-town.
The perfect bank job?
There are probably others involved in this scam. Like I said, I don’t think like a larcenist so I don’t know for sure. But here’s what I do know. This type of crime is ramping up. This isn’t the first case we as Title Company’s have seen like this. As the economy languishes, people grow desperate. And when people get desperate they are more willing to believe what sounds too good to be true.
Here’s my advice.
If you’re getting involved in a Real Estate transaction today make sure the people you’re working with have the expertise necessary to watch for traps. I’m not suggesting you can’t trust someone just getting into the business, we all had to start somewhere, but if they are new in the business make sure they have a reputable, well established company behind them. The Title Insurance company you choose is probably the most important decision you’ll make during a Real Estate transaction. (See, “Does Your Realtor or Lender Know What You Drive?”)
In a perfect world the original owners of the first property would get their home back, the old lien holder will get paid from the owners on the normal payment plan, the buyers will be reimbursed by the Title Company (That’s one of the 21 reasons for having Title Insurance), the Title Company has to pay another claim and the FBI gets the bad guys. In a perfect world.
Beware of the modern day bank robber. They aren’t in the bank with a gun anymore!
Please feel free to leave comments. Thank you.
Note: Besides being a CFII, MEI, Pilot, I’m a Title Rep. In other words, I sell Title Insurance. Comments made here are my own and do not necessarily belong to my employer; Chicago Title & Escrow.
Chicago Title has been in business for more than 150 years. It’s a company you can trust.