What is the story about people taking out mortgages on houses owned by
someone else?  I saw this on television, but forgot the details.  The
actual owners were stuck with the unwanted mortgages, while the
perpetrator made off with the money.  How is this done, but more
importantly, how can a homeowner prevent this illegal action?  I've
had some suspicious phone calls inquiring about whether or not I have
a mortgage.

Dear barb123,

The details will vary with the particular country (and possibly state)
laws. However, I expect that the mechanism would be similar. ie
relying on an older system of chain of title transfers, that only
required a forged signature and not a centrally registered title.

This is an example from Australia's Sydney Morning Herald:
http://www.smh.com.au/articles/2002/06/19/1023864458790.html

The related Land Property and Information bulletin from the relevant
state government shows that there is little risk under the Torrens
title system (originally began in 1858 and now covers the majority of
properties) as the government provides a guarantee of title.

Search Strategy:
"old system title fraud"

Just select the answer clarification if you would like specific
information for a particular locale.

Regards,

"The TAF underwrites the State guarantee of land titles in New South
Wales under the Torrens title system. The object of the Torrens system
is to provide certainty of title to land. The State guarantees the
validity of the title of persons who become registered as the
proprietor of land without fraud on their own part. "

http://www.lpi.nsw.gov.au/publications/ib79.pdf

interesting...
the house owner usually has title deeds and title to the land and
other formal documents.
lot-ga

You may have heard about "second mortgage fraud". The victims, usually
elderly, are sold overpriced home improvements, and sign a second
mortgage to cover the cost. Sometimes the work is done, usually in a
substandard manner, and sometimes nothing is done at all. In the worst
cases, the "contractor" does some initial demolition work, but does
not do any of the subsequent renovation.

The second mortgage is discounted (sold) to an institutional lender
who knows nothing about the fraud, and who can thus foreclose free of
the defenses that might be raised by the homeowner against the
contractor. Meanwhile the homeowner may be left in a home that is
uninhabitable, without the resources to repair the damage or to pay
the mortgage.

The consumerlaw site has some tips on avoiding second mortgage fraud -
but as I indicated, the real problem is if a third party lender
acquires the mortgage without knowledge of the fraud - in which case
the homeowner is often stuck.
http://www.consumerlaw.org/consumer/secmort.html