These endorsements will allow title insurers to cover any potential legal costs to correct public records if forged deeds or mortgages are recorded.

The first, formally known as the ALTA 49 Endorsement, covers forgery in a new owner's policy. Its purpose covers "situations where an ALTA Homeowner's Policy is either not available or not offered to the homeowner, the ALTA 49 Endorsement is designed to provide post-policy coverage for deed or mortgage forgery for homeowners who are purchasing or already hold an ALTA Owner's Policy," the group said.

The companion ALTA 49.1 Endorsement is titled "Forgery — Existing Residential Owner's Title Policy." It applies in situations where the homeowner has already paid off their loan and wants additional protection in case someone looks to record a forged deed or mortgage.

"The ALTA 49.1 Endorsement allows a homeowner who already has an ALTA Owner's Policy to add coverage into the future for risks such as deed or mortgage forgery that may occur after the endorsement date," a description of its purpose notes. "In short, ALTA 49.1 is for existing Owner's Policy holders who want post-policy forgery protection going forward."

The organization provides base policy title insurance forms, endorsements, closing protection letters and other documents which are standard for the industry. Borrowers must provide some form of coverage for the lender. A borrower policy is typically bundled with the lender coverage but is not required by the secondary market.

Iowa is the exception, where a state-run system is in place; however, Iowa Title Guaranty uses ALTA forms.

How big of a problem is seller impersonation fraud

An October 2023 survey from Certifid, which offers wire fraud protection services, found 54% of real estate professionals experienced at least one seller-impersonation fraud attempt within the prior six months. Over three-quarters of the respondents, 77%, said they noticed an increase in such attempts over the same time frame.

In May 2024, ALTA conducted its own online survey which found 28% of title insurance companies experienced at least one seller impersonation fraud attempt in the past year; 19% reported an attempt in April 2024 alone.

ALTA cited Internet Crime Complaint Center data, which found cyber-enabled crime and fraud resulted in losses of $174 million to the real estate sector last year. The average claim for a title insurer was over $143,000.

The added protections provided by the ALTA endorsements is a step in the right direction, said Ryan Marshall, CEO of fraud prevention and data security firm Equityprotect. But how will title insurers implement these changes in a way which creates real impact?

"For example, will the major underwriters reach out to past clients and property owners? Will they review title chains to confirm that the policies tied to new endorsements remain enforceable? And most importantly, what will the cost structure look like?" said Marshall.

Equityprotect will continue to recommend that homeowners pursue expanded title insurance policies for all of their future and prospective property purchases wherever such coverage is available, Marshall continued.

What is common in seller-impersonation fraud

These fraud attempts had common characteristics such as notarization issues and the use of the property owner's non-public personal information.

Red flags involve vacant land transactions, requests for use of an unknown notary and all-cash transactions, the ALTA report said.

"With criminals harnessing advanced technology to perpetuate sophisticated seller-impersonation schemes against unsuspecting homeowners, new products like the policy endorsements are needed to keep the American dream of homeownership intact," ALTA CEO Chris Morton said in a press release. "These endorsements set the standards for forgery protection before and after closing and build upon ALTA's landmark Homeowner's Policy of Title Insurance."

How ALTA changes its best practices

In addition, ALTA updated its best practices to give title agents better guidance in this area. These best practices, also known as the seven pillars, came out in the early 2010s in response to a Consumer Financial Protection Bureau statement holding originators accountable for the actions of their vendors. With the update, the current framework is version 4.2.

With the update, the organization is proposing new standards for identity-verification during real estate closings. These include specialized staff training to detect impersonation attempts, stronger controls over notary and signing-agent selection, additional verification steps for third-party professionals and defined protocols for responding to suspected fraud.

New York's first deed theft law indictments

On Aug. 7, New York Attorney General Letitia James announced the first indictments under the state's new deed theft law. Among the counts against the accused, Deepa Roy and Victor Quimis, are allegations that they forged a deed with the signature of the homeowner who was in hospice care at the time.

Those actions allegedly turned ownership of the property to the accused, who then transferred it to a company owned by Quimis.

The legitimate property owner's signature was reportedly notarized using a forged signature and incorrectly dated stamp from a Nassau County, New York, licensed notary. The perpetrators also applied the victim's forged signature on a number of other required real estate transfer documents, including a registration form for water and sewer billing from the New York City Department of Environmental Protection.

To accomplish the second transfer, the notary's signature was again forged.

Quimis was able to obtain a $552,500 mortgage; some of the proceeds were used to pay off the victim's home loan.