Detroit — Deed fraud, in which thieves fraudulently claim they own a home and even file forged paperwork to assume ownership, is at a crisis level in Detroit, with hundreds of cases working their way through the courts and advocates saying homeowners need to protect themselves.
There are more than 600 cases in Wayne County Circuit Court where someone is fighting to get their home back from a thief who relied on legal paperwork to steal the property, according to Detroit Councilwoman Mary Waters’ office. Waters recently hosted a series of town hall meetings to teach property owners about what they can do to avoid deed fraud.
Even after state lawmakers stiffened the laws last year against deed fraud, the cases remain at high levels, advocates and elected officials said. The switch to more online documents since COVID-19 has played a role in some scams, some officials said. Thieves often specifically target people who might be behind on taxes or mortgage payments, others said. Wayne County officials have attempted to crack down on the crime for years.
“Generational wealth is being stolen, and people don’t even realize it’s happening,” Waters said to more than 150 people at a deed fraud town hall on the east side last month.
Waters recently co-sponsored public events addressing the dangers of deed fraud in each of the City Council’s seven districts. Each town hall attracted hundreds of residents. In each council district, Waters’ office said it found more than 80 court cases involving deed fraud.
“People work hard to just own a home, and then they want to leave it for their next generation. And they get robbed of all of that,” Waters said.
The scheme, also known as home title theft, typically involves fraudsters forging documents to record a transfer of property ownership. In other cases, property holders may have transferred the ownership of their home to a scammer without realizing they have given up their property, according to housing advocates and others.
In the case of a fake transfer, someone typically goes to the county Register of Deeds office and files what’s known as a “quitclaim” deed on the home. A quitclaim deed is where the property owner transfers whatever ownership interest they have to another party — without any guarantees or warranties about the title. The name comes from the owner “quitting” or giving up their claim on the property.
A quitclaim is usually used to transfer a property to a relative, but others are using it knowing that it can be relatively easy to file the paperwork at the county Register of Deeds office, and that county officials must accept the claim.
“Somebody is taking time to use these quitclaim deeds, take them to the Register of Deeds and say they own the home. It’s mind-blowing,” Waters said.
State law prevents register of deed officials from rejecting the paperwork, said Harry Kalogerakos, chief deputy of the Wayne County Register of Deeds, who spoke at a deed fraud event last week on the city’s west side.
“We have to be objective. We can’t be involved in any of these documents” filed at the register of deeds and verifying if they are legitimate, Kalogerokas said. “We are forbidden by law to verify any of the information on our documents. We get a document that comes into our office that says, you sold your property and you’re not there in front of us, or it comes in by mail. We can’t take the time to call you up and say, ‘Did you really sell your property?’ We have to accept that at face value.”
A family targeted
Darnell Stewart attended a town hall in east side Detroit last month because his elderly uncle was a recent target of deed fraud. Stewart and his uncle found out another relative had recently filed a quitclaim deed on his uncle’s house without his uncle’s permission.
“Someone is trying to set themselves up of getting his house, ” when the elderly owner dies, Stewart said. “We’re both still kind of shocked that they could file the paperwork.”
Carla Jiminez attended the town hall event in the southwest part of the city because she’s concerned her daughter may be paying rent to someone who may not be the legitimate owner of the home.
“It all seems kind of shady,” Jiminez said, because her daughter’s landlord insists on being paid in person and prefers cash.
Jiminez said she and her daughter looked in public records and found the home has gone through a series of ownerships through limited liability corporations.
Hundreds of cases since 2020
Michigan State University’s Law School Housing Justice Clinic has been helping people deal with deed fraud. Donovan McCarty, the clinic’s director, said there is no comprehensive data on whether deed fraud is on the rise, or waning, but it remains an issue. He joined the MSU clinic last year but through previous positions he has been working on deed fraud cases in the Detroit area for years, he said.
“We’ve seen since 2020, hundreds of cases a year,” McCarty said.
Last November, Gov. Gretchen Whitmer signed a pair of bills that made filing fraudulent real estate documentation illegal. At the same time, Michigan law still requires register of deed offices to accept all deeds presented to them. But the new law gives officials more ability to investigate the cases and refer the fraud to the local county prosecutor, officials said.
Wayne County actually set up a mortgage and deed fraud unit in 2005 to investigate possible fraud. The unit’s officials said they have since investigated more than 2,300 cases, arrested more than 500 individuals and convicted around 350. About 400 homes have been returned.
Based on the cases MSU has handled, the COVID-19 pandemic appeared to have led to an increase in deed fraud cases, McCarty said, though he admitted the evidence is anecdotal. One explanation for the apparent rise in fraud is that many individuals became more comfortable signing documents online, he and other housing advocates said.
That has led homeowners to transfer the ownership of their houses online to a scammer without even realizing they have given up their properties, according to housing advocates and others. Scammers often look for people who are behind on their property taxes and possibly facing foreclosure, according to housing advocates.
Who is vulnerable?
Many Detroiters are vulnerable to deed fraud because homes are often bought with cash or a land contract, which creates more opportunities to fraudulently stake a claim, officials said. Another reason is the large number of homeowners who are senior citizens, which means they may not have checked their paperwork in years.
In a best-case scenario, homeowners can regain legal ownership of their home in six months, MSU’s McCarty said. Waters said her office has come across situations where people are still working to get their homes back after more than a year of legal efforts.
For residents such as homeowner Bernice Coleman, who bought and paid off her home “years and years ago,” the rise in deed fraud is eye-opening. She attended a recent deed fraud town hall to learn how to protect herself.
“I haven’t had to look at any of the paperwork for so long,” Coleman said. “I’ve been hearing stories about how people get their houses stolen. It’s very upsetting, of course.”
laguilar@detroitnews.com
This article originally appeared on The Detroit News: Stealing Detroit homes by deed fraud reaches a crisis, officials say
Reporting by Louis Aguilar, The Detroit News / The Detroit News
USA TODAY Network via Reuters Connect
