Forgeries are foreseeable but not always preventable risks assumed by a title insurer. They do constitute one of the hidden risks being insured under a title policy. Forgeries are always fatal to a title, and at the same time, a complete and frequently unrecoverable loss for the title insurance company.

While it is not feasible to develop an all-inclusive list encompassing the characteristics that are either present or prevalent in all the different forgery cases, it is, however, possible to summarize certain elements or circumstances that seem to surround or be present in the majority of forgery claims experienced by the title insurance industry. The mere presence of any of these elements or circumstances may not suffice to qualify the transaction as a forgery. They must be considered as "red flags" that should be seriously investigated and considered in conjunction with other elements that constituting the transaction. Generally, forgeries are a combination of more than one of these elements or circumstances.

These red flags for forgeries are the following:

• Parties Represent Themselves
  
  No attorney, real estate broker, or salesman is involved in the transaction, and the parties represent themselves.
  
  
• Closing of Nonescrow Transaction is not Attended by the Parties
  
  There is an unusual or unexplained failure of the parties to appear at the closing in person, and at the same time, the funds due to them are to be paid to others or to be wired to remote locations.
  
  
• No Contract of Sale
  
  There is no contract of sale or realtor involved in the transaction and the property is being sold at a bargain price.
  
  
• Document Alteration
  
  A document, which is to be recorded, appears to have been altered. The document shows different print, contains erasures, or a portion thereof has been deleted or changed with the use of correction fluid.
  
  
• Executions and Acknowledgments
  
  The closing of the transaction takes place in an agent's or Company's office, but the instruments pertaining to the transaction are being executed and acknowledged elsewhere.
  
  
• Forger's Personality Traits
  
  Never appears in person.
  Intimidating and pushy.
  Threatens to file a complaint against the closer and the Company.
  Complains about the lack of intelligence of the Company's personnel.
  Vociferous and obnoxious.
  
  
• Grantees of Uninsured Transactions
  
  The grantee of an uninsured transaction is selling the same property shortly after acquiring it.
  
  
• Some Interfamily Transactions
  
  Deeds from one spouse to the other. Deeds from parents to children.
  
  
• Cash Transactions (No Mortgages or Deeds of Trust)
  
  A recent transfer of property in the chain of title is shown as not being associated with any financing (a cash transaction).
  
  
• Long Gap of Inactivity in the Chain of Title
  
  The last deed of record was recorded many years ago. This long gap of inactivity in the title may raise important issues concerning the present mental condition or age of signatory.
  
  
• Name Discrepancies
  
  The name of the grantor conveying the property is spelled differently from the name of the record owner.
  
  The name of the grantor conveying the property has a different middle initial from the record owner, or the grantor has a middle initial and the record owner has no middle initial.
  
  The name of the wife joining the grantor who is conveying the property is different from the name of the wife who joined him in a prior mortgage.
  
  
• Notaries
  
  The notary's seal is irregular, or the notary is not listed in the state's records.
  
  
• Possession not Surrendered by Former Owner
  
  Information indicates that a former owner of the property has not delivered possession pursuant to the deed purportedly executed by the former owner.
  
  
• Recording of Instruments Antecedes Request for Title Insurance
  
  Request for title insurance is received in connection with instruments already recorded.
  
  
• Releases and Subordination Agreements
  
  The release of a large mortgage is found recorded without a corresponding new loan which could have provided the funds for the payoff.
  
  The release or subordination agreement allegedly executed by a lender is delivered to the Company for recording purposes without any requirement or instruction in regard to payment or consideration.
  
  The release or subordination agreement is executed and recorded independently of the closing proceedings.
  
  The release or subordination agreement is previously executed and then it is brought to the closing by the benefited party.
  
  The Company is instructed to abstain from establishing any contact or requiring any release or subordination agreement from a lender.
  
  
• Signatures
  
  The signature bears evidence of having been erased or overwritten.
  There are errors in the signatures.
  Signatures contained in instruments already recorded do not match.
  
  
• Taxes Appear Being Paid by a Former Owner
  
  Taxes or special assessments are shown as being paid in the name of a former owner.
  
  
• Lack of Physical Appearance of the Title Holder
  
  The title holder remains unknown, unseen, a "ghost." The person has no listed telephone number and operates through an answering service or a courier service. The person is always traveling.
  
  
• Title Holder's Address is Either Remote or Nebulous
  
  A resident of no state.
  P. O. Box address maintained in a remote location.
  
  
• Two-Step Sting
  
  Records show a recent conveyance and a release of mortgage. The transaction has not been insured. The grantee under the transaction is now in a rush to sell.

The possibility of a forgery requires strict compliance with the following:

• Immediately advise the National Legal Department of the possibility or intent of forgery.
• Not to proceed with the transaction.
• Not to record any instrument.
• Not to disburse any funds or proceeds.
• Not to pay or satisfy any lien or encumbrance.
• Not to accuse or charge any of the parties with the commission of or intent to commit a forgery.
• To follow verbatim the instructions received from the National Legal Department on how to handle the situation.