The Notary Public’s Role in preventing Property Fraud

The Notary Public’s Role in preventing Property Fraud

The FBI, the Financial Crimes Enforcement network, the Department of Housing and Urban

Development, major lenders and North American notary associations are involved in

detecting, reporting and fighting property and mortgage fraud, and the current housing crisis

underlines the extent of the scourge.

Notaries can be particularly efficient in fighting identity fraud and misrepresentation.

In identity fraud, an imposter poses as a homeowner, takes out a mortgage in the name

of the owner and forges his signature on the loan papers. The loan of course is not repaid,

so foreclosure looms for the real owner.

Misrepresentations are scams. For instance a thief tricks an owner into signing away his

property, usually when he cannot pay back his mortgage. The swindler offers to « save » the

home and has him sign loan papers with misstatements of contract terms or blanks that he

later fills in with huge sums that the victim cannot pay back. He may even include the deed

in between the pages of the file so that the homeowner actually signs away his property.

Because the notary public gives guarantees concerning the integrity of a real property transaction,

he or she can prevent such a disaster. First of all, thanks to physical appearance: by

law, grantors have to sign or acknowledge deeds in the notary’s presence, so the latter can

check the ID carefully and ensure « awareness and lack of duress » meaning that the person

signing is willing and not under pressure to sign. The paper trail is another guarantee as the

notarization has to be recorded with the signer’s thumbprint in the journal of notarial

acts, a public record which can be consulted. Finally notaries must scan all documents to

be sure they are complete and have no blanks which a swindler could fill in later.

However according to North American notaries’associations, notarial professionals must be

on their guard, as thieves are always seeking ways to outwit law enforcers, for example by

faking identification, stealing seals, or even using notaries whom they have spotted as careless

or weak and who can be bullied into signing without the physical appearance of the

parties involved.

Devoir 3

Moreover new ways of frauding such as property flipping1, chunking2, downpayment

scams3 and electronic fraud are common nowadays.

E-fraud is of course

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