Tag: scams

How Does Title Insurance Work?

Here at Tallgrass Title, we have discussed many topics about the nuts and bolts of real estate transactions: closings, probates, commitments, policies, etc.  But what is title insurance and how does it actually work?

Title insurance is essentially insurance that either insures that you actually own a tract of real estate and/or that a bank’s mortgage is valid and filed of record.  Title insurance, like other types of insurance, is governed by the individual state.  Insurance in Kansas is established and governed by state statutes that establish the types of insurance allowed to be sold in the state and various regulations governing the sale.  The major types are life, health, hazard, liability, property and title.  Further, Kansas Statutes establish the Kansas Insurance Department and Commissioner of Insurance. The Kansas Commissioner of Insurance is tasked with enforcing Kansas Statutes relating to insurance, licensing and regulating the sale of insurance.

When purchasing an insurance policy, an individual or entity enters into a contract with the insurance company.  The contract establishes the amount of coverage sold, the terms of the policy, exceptions to coverage and what constitutes a claim.  Kansas state law also establishes how fees are established and charged, how the money is accumulated, and who is entitled to the proceeds.  This ensures that when a claim (loss) happens, that the insurance company has retained sufficient funds to pay potential claims.  Otherwise, an unscrupulous company could sell policies and spend the premiums paid and then be without sufficient funds to pay a claim.  For example, if a consumer purchases a title policy insuring the person as an owner of the real estate with a policy amount of $100,000 and it is later shown that the property is actually owned by another party, a title insurance company is bound to pay up to the amount of $100,000 loss.  Now, there are a multitude of corrective measures and potential outcomes of any claim.  The bottom line is that a title insurance company is bound to hold a certain amount per $1000 of insurance sold for potential claims.

Kansas insurance statutes also require that reinsurance be purchased when a particular title insurance company’s “reserve” or “pool” is not large enough to cover the size of policy sold by the company.  This is done by purchasing reinsurance from another title company or other insurance company.  This protects the customer from an insurance company failing to have the reserves to cover certain sized policies.

In Kansas, most title insurance is sold through independent agents (including Tallgrass Title!).  An independent agent sells title insurance on behalf of a title insurance company, otherwise known as an underwriter.  An underwriter and independent agent enter into an agreement allowing the independent agent to sell its title policies with a certain division of the premiums.  Here at Tallgrass Title, we currently write title policies for three underwriters.  In our experience, each offers a unique product and the variety of options available allows us to better serve our customers.

In the end, title insurance is simply another form of coverage that specifically protects property rights.  Here at Tallgrass Title, we are proud to serve our customers in this regard.  This includes explaining any aspect of your real estate transaction or title policy.  If you have a question, feel free to ask one of our real estate professionals.  We love to talk title!

Combating Current Trends in Wire Fraud

By now most of you are probably familiar with the idea of scammers trying to steal buyers’ purchase funds. Since that amount is usually several thousands of dollars it makes sense that thieves would be interested in it. It ends up being a decent-sized reward for very little effort and risk.

Recently, we were made aware of a different twist in the wire fraud trend. Lately, title companies have started seeing scammers go after earnest money deposits. Even though the amount is relatively small, multiple thefts can add up to a nice paycheck.

How do they do it? A scammer hacks into a realtor’s or a closing agent’s email and waits. Pretty soon he (or she) starts seeing messages about a sale transaction. He emails the buyer posing as the realtor or title agent with wire instructions for their earnest deposit. The contract is signed and the buyer follows the scammer’s instructions not knowing he has been scammed. Eventually someone notices that the earnest money never was deposited, but it is usually too late to stop the funds from going to the wrong place. Unfortunately, the amount is so small that it might be virtually untraceable as well.

Here are a couple of ways to help reduce the risk of it happening to your clients:

Educate your clients! As soon as a potential client contacts you, begin arming them with the tools they can use to protect themselves. Sure, you don’t want to freak anybody out, but go ahead and warn them about the potential risk and what you will do to help keep them safe. Have them read and sign wire fraud information sheets as they sign their initial offer. Explain to them that you will NEVER, EVER email them about wire information. Go ahead and give your clients the confirmed contact information of the title company they will be using so they can confirm any wire information being sent to them.

Make sure your email is secure. Do not use a free email service. No matter how annoying it is to do it, change your password often! Send all documents relating to a transaction securely. If you think about it, a contract has names, money amounts, closing date, and contact info for some of the parties. It’s a goldmine of information for any scammer who may have managed to hack into your email. So send those documents through secure portals to keep everybody safe.

Help keep funds secure. Encourage your clients to use the secure programs offered by title companies, including CertifID for wire instructions and Earnnest for digital funds transfers.

The bottom line is we must respect every transfer of funds and work to protect those funds. If we don’t try to do anything about wire fraud, or think that it only happens to someone else, we are letting criminals have their way. A small action on our part could spike a scammers gun.

Internet Safety Tips

In this technological age, it seems like everything is at your fingertips. Have business to conduct?  Pull out your smart phone and get it done.  Have a report that is due while you are out of town and do not have all of the information you need?  Find an internet café or public wifi, pull out your laptop computer and get to work.  With the help of Wikipedia, Google, and any number of search sites, all of the information you need is at your fingertips.  Great, right?  It can be, but while it is easier for people to access information, it is also easier for hackers and scammers to access people’s personal information like social security numbers, bank accounts, and other personal information.  Once they have that information, Tada!  You now have six new credit cards, your debit card has been used to buy a new car half-way across the world, and you managed to get a speeding ticket in some hole-in-the-wall town three states over!  Your identity was stolen!  Scary, right? How can you protect yourself and your clients from this type of threat?  Here are some tips for practicing public (and personal) internet safety:

  1. Never log into your email using public wifi. Get yourself a mifi device. A mifi device is a personal wifi that uses cellular broadband to make a wifi connection. Not super convenient, or free, but using a mifi device is much more secure. You can password protect it and it pulls from a private source. You can also typically use your smartphone as a personal hotspot.
  2. Change your passwords frequently. If a hacker gains access to your password, they may try to access your system or account more than once over a period of time. Changing your password reduces the risk that they will have frequent access. It also keeps things like a keystroke logger, which is surveillance technology used to record keystrokes, from obtaining your password through repeated logins.
  3. Never email any documents that have your client’s personal information. If you do email any documents that have that type of information, make sure it is password protected and encrypted.
  4. Stop and read an email before opening any attachments or following any links. If you do not have your email set up to preview a message before opening, modify your settings to allow it. A lot of attachments and links in fake emails from scammers and hackers have viruses and other little nasty surprises that can corrupt your system or open a backdoor for someone to get to the rest of your information.
  5. Do not use a free email service for your business email. Yes, they are convenient, and better yet, free. However, they have the barest minimum of security when it comes to allowing junk through.

Computers can be a convenient tool that can make our lives easier in many ways.  By following these 5 rules, they can continue to be the tools that they are intended to be. Here at Tallgrass Title we are committed to protecting all of our associates and clients. Let us know how we can help you protect yourself and your clients from scammers and hackers.

Fraud & Hacking Update

With wire fraud and email hacking on the rise, we must all become more diligent in protecting our clients’ information. Here at Tallgrass Title, we take multiple steps to ensure that our clients’ information is protected.  One aspect of protecting our clients’ information is educating prospective buyers, sellers and real estate professionals about the dangers of wire fraud and email hacking.  With this purpose in mind we have created two informational fliers to educate all parties in a transaction. They are for use by real estate agents, banks and other real estate professionals.

We recommend that you provide these fliers to every new client that you represent.  You will also notice that this information will accompany every deed packet sent out by Tallgrass Title to Sellers in a transaction.  Protecting against wire fraud and email hacking requires all parties to a transaction to stay diligent throughout the process.  Should you have questions regarding potential wire fraud, email hacking or anything else that “just doesn’t feel right,” please feel free to contact our office and discuss the issue with our trained closing agents.  It is better to be safe than sorry!