Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, June 4, 1995 TAG: 9506060003
SECTION: HOMES PAGE: C-2 EDITION: METRO
SOURCE: CORRIE M. ANDERS SAN FRANCISCO EXAMINER
DATELINE: SAN FRANCISCO LENGTH: Medium
Most of them were elderly folks whose homes had been paid off. Many others were unsophisticated or low-income families whose property was fat with equity built up from the inflation of the 1970s and 1980s. Even seasoned real estate investors weren't immune to being duped.
Now, Harvey hardly gets a complaint - thanks to what might be called The Case of the Inkpad Experiment - a three-year pilot project in Los Angeles County specifically designed to deter real estate fraud and forgery before it happens.
The project requires each person who signs a deed to leave an additional piece of identification with the notary public - their right thumbprint. Persons outside Los Angeles must go through the same ritual if the real estate is located in the county.
Almost immediately, the number of real estate fraud and forgery complaints dropped significantly. They disappeared altogether in some cities.
``If you're a crook and you're going to forge a grant deed or a quit claim deed, you will be deterred unless you're just plain stupid,'' said Harvey, a detective with the Inglewood, Calif., Police Department.
The anti-fraud campaign has shut down real estate fraud so effectively that there is virtually no opposition to legislation by state Sen. Diane Watson, D-Los Angeles, to make the program permanent in Los Angeles County and by Assemblyman Cruz Bustamante, D-Fresno, to expand it statewide. It could serve as a model for a nationwide thumbprint program.
``In light of the undisputed effectiveness of this program in deterring and detecting fraud, it is decidedly in the public interest that it be extended,'' said Milton Valera, president of the National Notary Association.
The numbers aren't in yet for the program, which is scheduled to end in December. But losses due to real estate scams will be substantially less than $131 million; that's how much District Attorney Gil Garcetti said just 1,151 people lost through fraud in Los Angeles County between July 1990 and November 1992 before the program began.
The pilot program has a second component that also pointed out how prevalent fraud appeared to be. Over a 10-month period last year, the county recorder's office mailed 372,571 postcards to the last owners of record notifying them of title changes. Approximately 50,000 of the property owners returned a questionnaire - and 3,433 of them, 6.5 percent - said they had ``not authorized nor been aware'' of the deed transfer. The notification program is financed by a $7 fee on all recorded deeds.
The Los Angeles County Department of Consumer Affairs conducted a follow-up study of 100 who said they hadn't OK'd the transfer. Twenty-two percent of them were ``out and out fraud victims,'' said chief investigator Tim Bissell.
Real estate fraud took off in the 1970s as property values started to rise dramatically and homeowners suddenly had quite a bit of equity. Smooth talking con artists could smell the money a block away - and either tricked owners into signing away their property or simply forged the owners' name on deeds or loan documents.
``It's not just one scam or scheme. It's many, many of them - with many ripples and variations - and new ones coming up all the time,'' said Bissell.
It's easy for an impostor to pose as a homeowner and apply for a loan and fake the owner's name on the loan package, said Bissell. Cash in hand, the forger simply walked away without making any payments.
In one typical scam, professional crooks would pose as door-to-door sales men - selling everything from home improvements, carpeting and security systems to satellite antennas to water purifying systems. The criminal would slip a lien contract among the sales documents and the property owner would unwittingly sign it.
The goods often were cheap and defective or the promised improvements never completed. Once homeowners realized they had been had or owed a lot of money to a finance company, Bissell said, they would stop making payments - only to find themselves in foreclosure and losing a home with plenty of equity.
Real estate investors also get suckered by con artists who fraudulently claimed title to a property. Investors make second or third trust deed loans on what they believe is a legitimate property - only to discover later that the trust deeds are absolutely worthless.
Not all scams are run by professionals. Sometimes they're carried out by a relative, guardian or friend of a property owner. That's what happened to one Los Angeles victim while he was ill; his siblings took over his rental income property and were pocketing all the rents.
The fraud was discovered when the county notified the man of the property transfer.
Which is why police officers, prosecutors, consumer advocates, and notaries are on board to make the thumbprint program permanent.
``It's no big deal and it takes a few seconds,'' said Bissell. And best of all for Harvey, the bunco cop, ``A thumbprint doesn't make mistakes.''
by CNB