Seller impersonation attempts at the mortgage closing table more than doubled in two years and raises warnings for lenders about the need to develop clear strategies to prevent fraudulent activity.
The surge coincides with the rise of artificial intelligence, highlighting new types of risks that come with the emergence of any technology. But clear red flags exist that lenders can watch out for, a report from the American Land Title Association said.
"Criminals are investing time and resources to exploit weaknesses in real estate transactions, which means our industry must remain equally committed to strengthening safeguards that protect property owners and consumers," said
"In an environment where criminals are becoming more sophisticated, vigilance, expertise and layered defenses remain among the industry's most effective tools," she added.
ALTA's latest seller impersonation fraud study found 59% of title firms reported at least one such attempt during the previous calendar year. The share leaped from 28% reported in 2024, the last time ALTA conducted a similar survey.
Meanwhile, 45% said they had experienced at least one seller-impersonation attempt in the 30 days prior to responding to the survey, with the share accelerating from 19% in 2024. ALTA's research included data from 245 title industry professionals across the country.
How lenders can protect themselves
Technology advancements, particularly involving AI, are helping fuel the recent rise.
Two years ago, neither category was even listed as a potential tool used by fraudsters.
Meanwhile, 70% of firms saw the use of legitimate seller birth dates behind attempted impersonations, with 60% also pointing to scammers' existing knowledge of their other personal financial information.
Fraudsters typically look for ways to close transactions that avoid direct contact with the other parties in the transaction to evade detection, providing lenders and borrowers with warning signs of a possible scam.
- Eighty-nine percent of firms noted sellers' reluctance for meetings or calls as a common red flag.
- At the same time, a near-equal 88% share pointed to seller demands for mail-away signings or the use of their own designated notaries as a frequent tactic.
- Cash purchases or sales transactions involving properties without existing mortgage liens were considered common fraud indicators by 87% and 86%, respectively.
In seeking to avoid direct interactions, fraudsters commonly present themselves as sellers of vacant land, 82% of title firms said.
Among resident-occupied properties, 72% of firms said units with absentee owners, such as vacation homes, were a typical target of seller impersonation, followed by dwellings where a mortgage has already been paid off by 68%. Another common fraud method used involved sellers pretending to be recently deceased owners, noted by 55%.
To combat seller impersonation, 98% are using at least one tool to detect fraud, with 94% employing multiple defenses. Verification of identities, direct seller contact and multifactor authentication were the three most used fraud detection tools, according to ALTA.
"Every day, title companies combine technology, industry expertise and rigorous verification processes to identify suspicious activity and stop fraud before consumers are harmed," Blosser said.
