Protecting Your Home from Fraudulent Deed Transfers with a HELOC
0:31 Well, good afternoon, Michiganders, and welcome back to Tuesday with Tom Michigan's Only podcast where we talk about estate planning, a state settlement, and everything in between. As always, I'm your host, Tom Doyle, the state planning attorney, lifelong Michigander and your guide to planning for your future. Brief recap of last episode, Goodbye to Paper Checks. I talked about the new federal e payments mandate that is going to likely affect all of you that are listening to this program because it means the federal government is no longer going to be issuing paper checks, and the federal government is no longer going to be accepting your paper check for deposit. So you have your income tax return prepared, you owe taxes, you normally write a check and you send it off, or you're making your quarterly payments, you write a check and you send it off. None of that is going to be available for you any longer.
1:44 What you're going to have to do is have things done electronically. Or you're looking for a tax refund. You might have waited for that check to come in the mail so that you could cash it. That check is not coming in the mail. It's going to have to be electronically transferred to you by the federal government. So all of you need to be aware of this important change that takes effect on October first, which is only about seven days from now. So I encourage all of you listen to last week's episode today's show though, protecting your home from fraudulent deed transfers with a heelock. But remember what I'm about to discuss is meant to be for educational purposes only. It is not intended to be legal advice. As always, you need to work with your attorney, your tax advisor, your financial advisor to determine what makes the most sense for you and your planning. Protecting your home from fraudulent deed transfers with a helock. Well, let's just start out with what is happening and why deed
3:15 fraud is a growing problem in the age of online real estate records. Today, in most counties in the state of Michigan, real estate records are available either for free or for a very small price for downloading through an internet connection. So anybody can go to a Register of Deed's office where your home is located. Most likely we'll be able to download a copy of that deed. Now, there can be very good reasons why people might need to download a copy of your deed. You might need a copy, we might.
3:58 Need a copy in preparing your estate. But here is the fraud problem that is brought about because of online real estate records. Anybody can go download a copy of the deed. Anybody can then prepare a deed transferring that property from you to somebody else. Anybody could sign or have that deed sign and with the cooperation of a notary who might not actually even be a legitimate notary but is willing to sign on as a notary, you will have had a deed or they will have had a deed prepared transferring your property from you to somebody else. So that is what a fraudulent deed transfer is, downloading a deed, preparing a new fake deed, having it executed and notarized and recorded in Many of you right there are going to be saying to yourself, says, wait a minute, the deed has to be recorded. Doesn't the Register of Deeds office make sure that I actually executed the deed before they record it? Short answer, No, all the Registered Deed's office is doing is making sure
5:30 that the deed on its face meets the statutory requirements for recording a deed. That is, it's got appropriate margins, it's executed, it's got a notary, it's legible, it has a legal description, et cetera, et cetera. So the registered deed's office simply records the deed. They don't call you up and say, hey, Bob, did you sign this deed that is now being recorded. They don't do any of that. So, now, what's the consequence to you when this fraudulent deed is prepared? Well?
6:11 One that deed now creates a title, creates a cloud on your title to your property because anybody who would then go to their registered deed's office and look to see who owns it, which is normally what happens when somebody is going to buy property. It's going to show somebody else owns it. If you tried selling the property, you would discover that, in fact, it had been transferred to somebody else without your knowledge, which obviously creates a cloud on your title. It's going to cost you money for an attorney and time to unwide the unwanted if you will that fraud and the other problem. Obviously, somebody is not going through all of this just to own your home. They're going through all of this to do one of two things. Either turn around and sell that home to an unsuspected person who that person they're selling it to is going to go to the Registered deeds office see that there's a deed recorded with their registered deeds showing that the property got transferred to this fraudster.
7:28 Or it's possible that they. Will then go and turn around and apply for a mortgage on the property just like you. But hey, I've got property. I'm going to the bank. I want to get a loan. They're going to put a lien on the property. I'm looking for the money. So some of the fraudsters actually are there to sell it, and some of them are there merely to get the cash. They don't care whether it sells or not. They now have the money from the bank. So that is what deed fraud is today, and because of the ready availability for online records, it's becoming a bigger problem. Now, let's say you have a mortgage on your property. Well, okay, what a mortgage does is it has a lien. The bank is going to have a recorded lien on your property, so that if somebody goes to the registered deed's office, they will see, Hey, there's a lien on this property.
8:35 This owner owes money to bank A and before I can receive good title from somebody who's trying to transfer it to me, BANKA needs to be paid off. So there's a lien on the property, and that makes it more difficult than for the fraudster to actually transfer the property one in the first place. They're discouraged because of the LEAN. So when they're looking through registered deeds records, they can find out if you have a lien on your property. Same register of deeds records that's going to show that mortgage is also going to show any liens that are on the property. So with the LEAN, in all likelihood, the fraudster is going to say, wait a minute, I'm going to look for a property that doesn't have a lien on it, because if I'm going to try and commit a fraud, I now have to be dealing with the bank, and I have to convince the bank that it's a fraud, that it's a correct transfer, and I just don't want to deal with any of that.
9:39 So we're going to be looking for property. They're going to be looking for property that doesn't have a lien, which means what you've got a mortgage, you pay your mortgage off, that lean is going to be discharged. And so when that lien gets discharged your bank, essentially that protection of the lean, protecting not not designed to but in practicality protecting you from the roster fraudster, goes away. So think about that, all right.
10:20 The vulnerability, the biggest vulnerability, is going to be for mortgage free homes. Most of us are excited when we finally pay off our mortgage. I remember when my wife and I paid off the mortgage on our home. Isn't that great? We've made our last payment. We own the home outright. We don't have to make these monthly payments to the mortgage company, we don't have to have an escrow for our taxes, insurance, et cetera, et cetera, And we now own the home free and clear, and we get a copy of that mortgage discharge, and we say we've accomplished the American dream of owning a mortgage free home. Unfortunately, though, from what I just discussed, that status of now being mortgage free can actually make your property an easier target for deed fraud, and often, unfortunately, as we know, oftentimes fraud, whether it's a fraudulent deed transfer or other types of fraud that we've talked about before, often target seniors and long term homeowners. Why because it's the seniors or the long term homeowner that it has likely paid off their home.
11:45 If somebody is young and just bought the home, they're likely going to have a mortgage on it, and that mortgage is going to effectively prevent them from that mortgage d that fraudulent deed occurring. So they're going to be again. Targeting seniors and targeting long term home owners. So you've paid your mortgage off, you don't want to take out a new mortgage because it's paid off, you don't want to be making payments. Well, consider. A home equity line of credit called a heelock.
12:26 What is that? So you go to your bank or your lightening institution, whoever you're dealing with, and you set up a home equity line of credit. That doesn't mean you're actually taking the money. It simply means you could take the money if you decide that you need it. But in that process of taking out the heelock. What's going to happen. Your bank, your credit union, your mortgage company, whoever you're getting the heelock through, is going to put a lean. On your property. It's very similar to a mortgage in the sense that it's a lean.
13:07 Okay, just like. Your mortgage would have a lien on your property. But the difference can be you're not taking the money, You're just setting up the ability to take money if you should. Decide that you needed to use the fund. So once you do that, go back to our fraudster, go back to someone who's looking at register deed's records. They're looking saying, hey, this home has a lean against it. We're gonna skip over this one. We're not gonna commit fraud on this home because it has a lean. Why because, just like that mortgage, if they want to try now selling that home, the lean has to be addressed. The lean holder, the lender is going to be involved.
13:54 And so again that's going. To add that layer of security and verification before any transfer occurs. So pay your home off, get rid of your mortgage. But one way to address and protect yourself now from the vulnerabilility that is basically now being created by paying your mortgage off is to put in place a helock. Now, if you do this, obviously there's going to be a cost involved with it. You're going to have to check, you know, with your different lenders on what's the appropriate helock for you and what's the cost of doing that. But that's all part of the consideration in trying to protect your home from that fraud. Now you might be saying, too, Hey, you know what I see on TV these services right where they say they're going to check my they're going to check my real estate for me, They're going to let me know and they're going to protect my real estate from being sold to fraudsters. Well, the problem, the problem with that service is they are not knowing that a new deed has been prepared. They don't know when a new deed has been recorded. They are finding out on your behalf that a new deed has been recorded sometime after it's been recorded.
15:29 Well, you could do the exact same thing. You could say, you know. What, every month, every month, I'm going to go online, I'm going to. Go look at the registered deeds records. I'm going to look at my home on the registered deeds records to find out if there has been a transfer of my home. But all of that is after the fact. By then, by the time you find out, it's very possible that that home has been old, or that home has now had a mortgage, or that your home not that home, your home has been sold, or that your home has had a mortgage on it. What the heelock does for you is that it puts a layer of security in varication before the home can be sold, before a mortgage.
16:25 Can be placed on the property. So don't listen to those TV ads and think that that's somehow a solution to your problem. Also, we're very keen on recommending to our clients if available. Oftentimes the registered deed's offices do themselves have services available where they will notify you if a deed gets recorded. Well, again, they're notifying you after the deed's been recorded, which by then and by the time you find that out, if somebody's going to fraudulently take your deed, they're not looking to hold on to that deed. It's getting it recorded, it's getting it sold asap, or taking out a loan asap, all which could occur before you even know it. Think though too, there can be some additional benefits to you of the helock. Beyond avoiding the fraudulent transfer, it would give you access to emergency funds. So if you've got a helock set up, even if you haven't taken the money, usually it's pretty quick when you contact your lender to have funds put into your account. Also, if you are going to borrow money, if you think about it, that by virtue of a helock, oftentimes the interest rates might
17:56 in fact be lower than other forms of credit, so you might be better off using those funds that are available to even pay off higher credit maybe credit cards or whatever it happens that you have. And generally speaking, with a helock, you don't have to take the money, you don't have to draw the funds. You can just leave it in the bank. While you're still receiving the protection of that lean that's been filed against your property. Obviously you sell the property then, or your air sell the property, the lean's going to have to be discharged, certainly, but if you haven't borrowed anything under the heelock, there's really nothing to repay. It's just getting the lean discharge. Now, some other fraud prevention measures again that you might consider one regularly monitor your records through your Registered deed's office. But now you have to do that, you have to regularly go out and look and see if somebody has put a lien on your home. Again, sign up for that property fraud Alert service from the Registered Deeds office, because that's normally free.
19:14 I'm not talking about one of. These services that you see advertising on TV where they're essentially charging you to do what you can do for free, which is to regularly go and look at your records if that's what you want to do, or at least sign up with the fraud alert service from your Registered deeds which is again generally free with at least as far as I know, most if not all other registered deeds offices in the state of Michigan. And of course, identity theft in general. This has nothing to do with the real estate, but identity and JEFF in general. Please make sure you're keeping your personal identification information secure. Please know if you're giving out your Social Security number, who you're giving it to and why you're giving it to them, Or if you're giving somebody even a copy of the deed to your home, why are you giving it to somebody and what are they going to do with that?
20:13 All those kinds of things, birthdays, all those kinds of things, which generally simply has to do in general with preventing identity theft. So enclosing you've paid off your mortgage, please consider having If you haven't paid your mortgage off, don't worry about it because there's a lean. But if you've paid your mortgage off, I encourage you consider having a heelock as a tool to protect your home from fraudulent ded transfers. In fact, we have been told recently about by a client who when they went to their bank, and we're doing banking for other reasons, that bank apparently, when they are talking to their customers, who in fact have paid off their mortgages, that they are recommending to their customers, they are affirmatively saying to their customers, hey, your home would be more secure from a fraudulent transfer if you take out a helock. So some of the banks are even getting involved in attempting, apparently to be proactive in protecting their customers. So meet with your bank, or meet with your credit union, wherever it is that you're doing your banking and explore what it would take to.
21:40 Get a helock. And again, remember it's not really about borrowing money. I know some of you look and say, well, I don't want to borrow more money. I don't want to have a lean against my home because I paid it off. It's not about that at all. You don't have to borrow the money. You just need to set up the helock so that you create that protective shield on your title. So review your situation, speak with a trusted lender, and if need be, even consult with professional legal professional such as US. But you probably aren't going to need that so much as much as it is just working with your own lender to see what it would take to put that helock in place. Of course, as all simply switching gears a little bit, Aman and I would be honored to help you protect but you love.
23:00 Whether that means. Creating a new estate plan for you, updating an existing one, or perhaps answering your questions if you have any about today's program, or guiding you through the estate settlement process during a difficult time. We try to make it easy and convenient to get started. We have appointments in office, appointments available in both Grand Rapids and lancing. We have virtual consultations that can be by sooom or phoned wherever you are in the state of Michigan. And if all you're looking for is one document, Let's say you already have your state plan in place, but you need a new certificate of trust, or maybe you need a new power of attorney, whatever happens to be encourage you visit the legal store at our website where you can order individual documents online and all of that. How to schedule an appointment, whether it's in person or virtual, or our legal store all available at Doyle LAWPC dot com, which is the website for the office. Well, I think that's going to be a wrap for today's show.
24:29 As always. Ooh, if you have a comment or a question you'd like to have answered, or a topic that you'd like me to cover in a future episode, head over to Tuesday with Tom dot com. There you can leave a voice message by clicking on the microphone, or you can always send me an email that would be Tom at Tuesday with Tom. Please be sure to follow us on Facebook invite your family and friends to do the same. That again is Tuesday with Tom and the Office is of course Doyle Law PC, and don't forget subscribe to our monthly email newsletter. You can do that at Tuesday with Tom dot com or at Doyle LAWPC. So either one of those you can subscribe and you will begin receiving our monthly newsletter where we talk about different topics that we think would be of interest to you. Remember too, you can listen to Tuesday with Tom wherever you enjoy your podcast. We're on Apple Podcasts, Spotify, Amazon Music, Google Podcast, iHeartRadio, Speaker probably wherever it is you listen to your podcast, you're going to find us. And if you don't tell us about that, and we'll see what it would take for us to be available on that channel that you prefer to listen to your podcast. And remember too, you can always ask your smart speaker to play Tuesday with Tom. Well, thanks again for spending part of your day with us,
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