Title insurance industry innovates to protect consumers from fraud

With real estate fraud becoming more sophisticated, the title insurance industry has taken a transformative step to protect consumers and redefine what it means to protect a home in today’s environment. This month, the American Land Title Association (ALTA) will introduce two new policy endorsements that offer forward-looking coverages that directly guard against seller impersonation fraud, a dangerous and rapidly growing risk in real estate.

According to the FBI’s Internet Crime Complaint Center (IC3) report, cyber-enabled crime and fraud resulted in losses of $174 million in the real estate sector during 2024. Seller impersonation fraud, where criminals forge deeds to illegally sell someone else’s property, have increased, with 28% of title insurance companies experiencing at least one attempt in 2023.

These crimes can derail lives, drain savings, and force families into costly legal battles simply to defend what’s already theirs. In fact, the average title insurance fraud and forgery claim costs more than $143,000, which is more than twice the national average salary in the U.S. 

That’s why ALTA has introduced two new title insurance endorsements that offer post-policy protection against forgery. These endorsements allow homeowners — whether they’re purchasing a new policy or already have an existing one — to add coverage that addresses a pressing threat. 

This market-driven move builds on what began in 1998, when ALTA developed the Homeowner’s Policy of Title Insurance, which provides enhanced coverage compared to the standard Owner’s Policy. The enhanced policy was created in response to calls for stronger consumer safeguards. It was a big moment, marking the first time buyers could get coverage for problems like forgery that might arise after they moved in. 

However, not all policyholders have historically been offered or opted into this more comprehensive coverage, which is why these endorsements can benefit consumers. In some states, the Homeowner’s Policy of Title Insurance hasn’t been approved by regulators. 

Now, with these new endorsements, homeowners have another affordable option to proactively guard against deed and mortgage forgery. These endorsements are also accompanied by one of title insurance’s most powerful protections: the duty to defend. 

If someone attempts to record forged documents related to a homeowner’s property, the title insurer steps in — not just to resolve the issue, but to cover legal expenses and defend the homeowner’s rights in court. That’s an enormous relief for homeowners who might otherwise face substantial legal fees to untangle a fraudulent claim on their property.

ALTA’s efforts don’t stop with policy innovation. Recognizing that fraud prevention must begin before documents are recorded, we’ve also updated our Best Practices framework to raise the bar for identity verification and closing security across the title insurance industry. 

A new identity fraud prevention program being released this month as part of ALTA’s Best Practices establishes clear expectations for how title and settlement companies manage identity risks, including training staff to recognize the signs of impersonation fraud; implementing procedures to carefully control the selection of signing professionals; outlining the responsibilities of in-house signing agents; and establishing additional confirmation steps when working with third-party agents. 

The guidance also requires companies to treat documents notarized by outside professionals as potentially “at risk” and to create clear internal protocols to respond to suspected fraud attempts. Taken together, these efforts mark proactive steps to address the variety of threats homeowners face.

Real estate fraud is quickly evolving, and we have to lead with new approaches to combat it. That means not only enhancing the integrity and security of real estate transactions for consumers by offering the strongest protections through title insurance policies, but also putting stronger safeguards in place throughout the transaction itself. ALTA and the industry are committed to staying one step ahead and protecting what matters most: the security of homeownership.

This moment calls on all of us — insurers, agents, lenders, real estate professionals, and regulators — to work together to amplify the tools and protections available to consumers. These endorsements and safeguards aren’t just technical updates. They’re a renewed promise to homeowners that our industry will keep innovating to protect the places they call home.

Chris Morton is the CEO of American Land Title Association.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: zeb@hwmedia.com.