Columbus, Ohio – In 1982 Mr. and Mrs. Charles O'Brien were owners of eighteen rental properties around Ohio State University.

A local bank held a blanket mortgage against the eighteen rentals plus the O'Briens' personal residence, for $1.6 million.

Planning to divorce, Charles asked the bank to give a partial release of its mortgage as to his residence so it might go to his wife free of debt. The bank agreed, and the partial release was recorded.

Days later Charles contacted the bank again and falsely reported the partial release lost. Believing it was not recorded, the bank provided another original partial release which Charles picked up for delivery to the recorder's office.

On the way the strangest thing happened. Somehow, these words were added to the legal description contained in the release:

"and all other premises set forth on Schedule A attached hereto."
And, a "Schedule A" was attached containing a list of Charles' eighteen other properties.
In the years that followed Charles gave ten new mortgages totaling $1.4 million to different banks secured by the eighteen properties. All were insured by First American without exception for the fraudulently released blanket mortgage, which continued to enjoy performing status due to Charles' continuing payments.

In the spring of 1990 Charles stopped making payments and the respective lenders discovered their competing claims for priority against his assets.

Ultimately, the properties were foreclosed by mutual agreement of the competing lenders and First American paid $472,500 to settle all claims. The Company also paid legal expenses of $194,048.

Los Angeles, California – Robert B. had a problem - he was being sued. After judgment was entered against him for $178,842, an abstract of the judgment was recorded and a judgment lien was created against Robert's condo home. Robert had a lot of equity in his condo. It was worth almost $100,000, with only one deed of trust against the property securing $31,000.

In late July 1993 there was recorded a second deed of trust from Robert to his father securing payment of $55,000. Although this deed of trust was recorded after the judgment lien, it was dated as having been signed several years before. This recording may have been an attempt to shield Robert's equity from his creditors; but we digress.

Soon Robert contracted to sell his condo for $98,000. An escrow was opened and the ensuing title search turned up the judgment lien.

Our agent sent Robert a copy of the judgment lien and told him that unless it was otherwise cleared the lien would either have to be paid and released through escrow, or shown as an exception in new title insurance policies to be issued. The lien identified the judgment debtor by full name (Robert's) with a last known address in Woodland Hills, and included the debtor's driver's license and Social Security numbers.

By return fax our agent received a letter purportedly from Robert saying that the judgment lien "in no way has anything to do with me, either directly or indirectly." Attached were photocopies of Robert's driver's license, Social Security card and a completed statement of information showing no former residence in Woodland Hills.

Since the information given by fax did not match details shown on the judgment lien, our agent closed without clearing the lien.

At close of escrow $55,000 was disbursed to Robert's father, but the check was endorsed over and immediately deposited into Robert's bank account.

Our agent was later contacted by an attorney for the judgment creditors. It turned out the lien was valid against our insured property. The Social Security number which we thought was Robert's has never been issued to anyone, and the driver's license number belongs to a man living in San Jose.

Robert denies responsibility for the false fax; he implies that a real estate agent sent it.

First American negotiated settlement with the judgment creditors, paying $57,279, and also paid legal expenses of $3,468.

Fairfield, Connecticut – Roy Bobowick applied to several lenders for a new first mortgage against his home. Two lenders approved and one of them ordered title insurance from an agent of First American. Just before closing the agent performed a "last look" or bring-to-date search at the town clerk's office. Finding nothing new, the agent closed and the new lender's mortgage was insured for $250,000. It soon came to light that our insured first mortgage was in fact a second. It seems both of Roy's loan approvals resulted in closings. The other lender's mortgage, also in the amount of $250,000, was recorded March 28. Our insured mortgage recorded April 11. Our agent missed the senior mortgage on his bring-to-date search because the page showing it was removed from the clerk's day book, admittedly by Roy, just before the agent's visit.

After foreclosure First American paid its insured $150,000. The Company also paid legal expenses of $12,064 to investigate and pursue recovery.

Moral: People do the darndest things thinking they won't get caught.

Often they over-encumber property hoping to profit big from some new business venture or "can't-lose" investment, thinking no one will find out.

While First American is diligent in filing criminal complaints and pursuing recoveries, money stolen through a false pretense is usually impossible to get back.

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