Most jobs get credit for what people can see them doing. The skill of the surgeon is reflected in the result. The engineer’s work is evident in the bridge holding. In real estate, the closing table often gets all the attention, from signatures and handshakes to handing over the keys. What doesn’t get enough attention is everything that happened before that moment to ensure that the transaction was legal in the first place.
That’s the part of a title agent’s job that almost no one talks about.
Real estate closings look, from the outside, like paperwork and inventory. Paperwork is compiled, money is transferred, signatures are collected, and the title changes hands. That’s the visible part of the job, but it’s actually not the most important part. What many buyers, sellers, and even our lending partners fail to realize is the same process that underlies everything that is done: a professional, systematic effort to detect fraud before it does damage.
Although the industry doesn’t talk about this enough, maybe it should.
Cheating is more complicated than people think
Forged documents have been a part of real estate fraud since time immemorial. What has changed is the form. One of the more robust systems involves creating a deed—recording it in county court and then trying to sell the property that the fraudster doesn’t own. Vacant land and unoccupied houses are very attractive targets because the original owner is unlikely to notice until significant damage has been done.
Escrow agents are trained to catch this type of fraud and the training is more complicated than it sounds. They are taught to examine signatures across multiple documents within a transaction and compare them for consistency, identify transaction profiles that match known fraud patterns, and dig into subject records where something doesn’t logically follow. It’s hard work, and you don’t advertise yourself. If successful, the shutdown simply proceeds as normal. If it is skipped or rushed, the buyer may end up holding a worthless title to a property that is not legally his.
An exception to this involves family members such as older children trying to represent an elderly parent through notarized documents, or in specific cases, by trying to claim ownership directly. Agents encountering high-risk situations will often obtain and verify the power of attorney themselves rather than relying on what is presented, which is exactly the type of conflict that prevents opportunistic fraud.
Wire fraud is now a major threat
If fraud represents an older, more analog form of fraud, wire fraud is a version that emerged when the industry moved away from checks and physical cash. Business Email Compromise (BEC) involves fraudsters intercepting or impersonating email communications to redirect wire transfers to accounts they control, usually for a lower buyer fee or closing fees. The losses, when these systems work, are often large and very difficult to recover.
Defense against BEC is not a single tool but rather, a layered approach. Topic experts now routinely use encrypted communication and multi-factor authentication as basic protection, but the most important function is behavior. Agents train all teams on what official fund transfer instructions look like, when those instructions will and won’t change, and how to verify any deviations from the established process through a channel that doesn’t include email. That last episode is serious. A fraudster who has already broken an email chain can impersonate a legitimate message convincingly. An out-of-band phone call to a verified number is much harder to fake.
Some companies have also moved to guarantee funds held and released from escrow as an additional layer of protection, a backstop that can help create some measure of recovery if the plan fails despite best efforts.
The gap between perception and reality
Many people who close on a home come in thinking that their agent’s job is to collect paperwork, manage the escrow account and sign. While that is an accurate description of virtual work it is also an incomplete description of work.
Fraud prevention function works simultaneously with everything, mainly invisible to everyone at the table: signature analysis, topic chain review, BEC training, chain verification protocols. It is not a glamorous job. Rarely does it produce an amazing moment. Often, the result is simply that nothing bad happened, which is the best outcome and the hardest to get credit for.
In an industry that spends a lot of energy talking about its value, the security role of subject matter experts is probably the most under-explained. There is a real conversation to be had with buyers, lenders and real estate partners about what title officers are really forbidding, not just what they are helping you with. The work is done. It just needs the audience to understand it.
Jay Roberts is the Chief Technology Officer of Florida Agency Network and Premier Data Services.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: [email protected].
