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The Persistent Threat of Impersonation Fraud
UNDERWRITING REQUIREMENTS – MUST READ
Seller Impersonation Fraud is a continuing risk to real estate professionals and clients. Being fooled into paying the purchase price to someone pretending to be the owner of the real estate can result in a massive loss.
If you are representing a purchaser and the seller is not a prior client of any real estate professional involved in the transaction and one or more of these red flags are present, you must take action to verify seller’s identity before issuing a CATIC Policy:
- Property is vacant land or an unoccupied home or building unencumbered by a mortgage; and
- Seller communicates exclusively via electronic means such as text, email or telephone; or
- Seller claims to be unavailable for either an in-person meeting or the closing, so all contact with seller is remote and all closing documents must be executed by seller remotely; or
- Sale price for either this transfer or one within the past two years is below fair market value and the seller in this transaction insists on payment in cash.
These conditions require underwriting approval to confirm that reasonable efforts have been implemented to verify that the seller is legitimate.
REMINDER: Get ahead of the transaction and request seller’s counsel to send a fraud avoidance letter to a verified address of the purported seller. The letter includes a unique code and a contact number for immediate reply by the property owner.
Further, the following tactics can be employed by an attorney or a real estate agent to verify the seller’s identity:
- Ask the person for the original tax bill, title insurance policy or other document that only a true owner would have.
- Obtain the age, current address, signature of the real owner, employment information or other personal information using online or public records, tools or social media accounts. Look for any inconsistencies between what is discovered independently and what has been provided by the seller.
- Do a reverse search on the email or telephone number provided by the seller and ask for a government issued form of ID with a photo, address and signature.
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Use an ID verification tool. Some require the involvement of the party whose ID is being verified and can either confirm the identity of the person or reveal that the person is an impostor. In some cases, the impersonator may refuse to comply or falsely claim there is a problem with the technology, thereby exposing the attempted fraud.
The Vermont CATIC office also has access to a research tool that provides comprehensive reports on individuals by compiling years of non-public information and publicly available information, which can then be used to test the purported seller’s knowledge, compare information that the seller has offered, and afford current and reliable contact information.
Contact Liz Smith and Steve Ducham at underwritingvt@catic.com.
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