Think you own your home? Check the deed.
“It's easier to steal a house than a car.”
That is the message Karen Yarbrough is trying to spread throughout Cook County. Since assuming the role of Cook County Recorder of Deeds in January, she has made it her goal to stop property fraud from happening in her county.
“This is so important – the average person's most valuable asset. A person's home represents everything,” Yarbrough said during a recent property fraud informational session in Maywood. The session was offered in Spanish in an effort to reach the large Hispanic population in that area. “Most governmental bodies, when finding a loophole in their department, would try to keep it quiet. We want to get the word out so we can stop this.”
Property fraud is the intentional filing of false deeds or liens with the recorder's office – an offense known as “unlawful clouding of title.” Because county records are public and searchable online, anyone can view the records of a property. Credit agencies, banks and businesses use the county recorder to document mortgages and debts owed, which is why the system remains open for anyone. But this also allows illegitimate claims to be filed.
Yarbrough’s office has identified two types of fraud. One poses a threat to a property owner's credit and finances, the other is used as a personal attack. Both can be expensive to combat and are serious threats to a homeowner, but are filed for different reasons.
John Mirkovic, Yarbrough’s communications director, explained how a document could be filed with malicious intent against a property. “You could pay $50 and put a lien on someone who you feel has wronged you. It could cost them thousands to take it off.”
Mirkovic said that the recorder's office often sees claims of money owed for work done on a house or quitclaim deeds filed to transfer ownership of a property. While these filings can be done for legal reasons, often they are indicators of fraudulent activity. In malicious filings, the claimant often won't actually expect to take ownership of the property or collect for services rendered. The claimant only wants to make things difficult for the property owner.
“If they say, 'I'm going to pretend that I did work on this guy's house and file a $25,000 lien on it for services rendered,' a title company is going to look at that and they're not going to be able to tell that it's not legitimate.” Mirkovic said that these types of records can severely damage the home-buying process. “It'll be on the courts to get it rectified. It can delay a real estate transaction, or it can completely scuttle it.”
The other type of fraud is more predatory than vindictive. These cases occur when a perpetrator identifies a home that is either vacant or no longer carries any financial burden – the mortgage is paid and there are no additional liens on the property. According to Mirkovic, property thieves often identify the houses in person, then go online to identify their target.
“You could use public information to cherry-pick a house with no mortgage – find one that’s owned by an elderly person, that is paid off.” Mirkovic explained how, in the eyes of the recorder's office, a notarized deed filed on a property is assumed legitimate and not initially questioned.
“You own it now. Each action after that is more fraud, but if you've already stolen the house, you'll sign other documents taking out a loan.” A homeowner, without regularly checking the status of a deed, may not know that someone else has taken advantage of their asset – until the homeowner is responsible for someone else's mortgage on the property.
The Cook County Recorder’s office has investigated 94 fraud claims since Yarbrough took office in January. They expect even more claims in 2014, as awareness grows about the crime.
Yarbrough's legislative legacy
House Bill 2832 – Creates a process, with judicial review, that will allow a Recorder of Deeds to remove a document suspected to be fraudulent from the chain of title. Requires notice to the filer and owner, and provides due process.
The legislation identifies several red flags that may identify a fraudulent filing, and allows a Recorder to enter into an intergovernmental agreement with law enforcement agencies or other county officials to investigate and prosecute fraud.
House Bill 2905 – Increases the penalty for “unlawful clouding of title” (knowingly filing false claims of ownership or interest) from a misdemeanor to a felony.
House Bill 2269 – Extends a provision of the state Notary Act that is about to expire that requires notaries in Cook County to keep and forward a notarial record of each document that transfers ownership of residential real property to the Cook County Recorder’s office.
This law helps provide information that could assist law enforcement with investigations into property or recording fraud. It also lets notaries know that these transactions are held to a high standard, and that they should exercise all due care in assuring documents and identification presented to them are legitimate.
Yarbrough campaigned on the promise of protecting Cook County from property fraud and feels her office is making progress. They've increased use of the county's fraud alert system, which sends messages to property owners when new filings are made on their property. They've helped pass three laws that make property fraud harder to perpetrate and easier to prosecute. And they've been hitting the streets in an effort to make this offense more widely understood in the community.
“I walked in the door and I had heard that this stuff was going on. I wanted to deal with property fraud.” The recorder's office had a fraud alert system in place before Yarbrough took office in January, but due to technical glitches and lack of promotion, it was all but unused.
“There were five properties signed up,” Yarbrough said of the property fraud alert system. Her administration fixed the site, rebranded it and began a campaign to inform residents of this silent threat to their assets. Their efforts have begun to see fruit: “Last month, we had 10,000 signed up,” Yarbrough said.
A 2,000 percent increase in enrollment is certainly an improvement, but the recorder’s office realizes that there is much more work to be done. According to city-data.com, there were more than 1.1 million properties in Cook County as of the 2010 census. Almost 300,000 of those are unburdened with mortgages, making them more at risk of property fraud.
Yarbrough admits that her office cannot actually do anything to prevent this type of offense. “We are obligated by law to record – we do not verify.”
This limitation of the county recorder's office was a source of frustration some state representatives when Yarbrough's proposed bills landed in Springfield. Jeanne Ives, a Republican who represents the southwest suburbs, said that while she understands the dangers of property fraud, the measures being proposed were too heavy handed.
One of the bills that Ives opposed was HB 2905. Opposed by 44 lawmakers, this measure makes the unlawful clouding of a title, formerly a misdemeanor, a Class 4 felony. Ives said, “a felony is too much, especially for first-time offenders.” She said that she has seen too much human error to justify placing such a permanent charge on property fraud. “People in county recorder's offices often make mistakes. Who should really be liable?”
Jack Franks, a Democrat who represents a northwest suburban district, agrees. “We shouldn't be locking people up for a non-violent offense like this.” Franks believes the fraud should be curbed, but thinks that prison is not the answer. “I don't think there is empirical evidence that enhanced penalties will reduce these crimes.”
Ives also opposed HB 2832, a bill that sought to streamline the judicial process once a fraudulent document has been identified.
“There just wasn't compelling evidence that a change should be made,” Ives said. She believes that a county recorder's office should be able to review the validity of documents, rather than maintaining a passive role in the process.
“They're adding another layer of review – maybe we need to fix the current system instead of adding more legislation.”
Despite her office's inability to prevent the damage, Yarbrough says that her legislation is trying to streamline the adjudication process once a fraudulent filing takes place.
“We've created this process so that we're better prepared and ready. Our entire front-line staff now knows: If it looks like a duck and it quacks like a duck, it probably is one. We kick it to our fraud unit, then we kick it to the administrative law judge.” Within days, a property that is suspected of fraud can be flagged, alerting potential lenders before mortgage fraud takes place.
And the Cook County Recorder's Office is being proactive on the front lines too. Though they cannot deny a false document, they can advise perpetrators of the consequences of their actions. Signs hang throughout the Recorder's office, reminding visitors that “CCRD will assist in your prosecution” if you “knowingly record a document with the Cook County Recorder of Deeds that creates a fraudulent irregularity in the chain of title for a property.”
Yarbrough has plans for additional information sessions in 2014 and is focusing on reaching minority populations who may not have heard about the dangers of property fraud. In addition to the Spanish-speaking session in Maywood, the recorder is planning a Polish-language session on the Northwest Side.
Yarbrough said she realizes that immigrant communities are less likely to come to the government for help, which is why she is reaching out to minority groups throughout the county. She said that she hopes that those who attend these meetings will tell neighbors and friends. With 1,133,857 properties still not enrolled in the property fraud alert system, the recorder's office has a lot of work ahead.