“Protecting Your Home Purchase: How to Avoid Mortgage Wire Fraud”

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What Is Mortgage Wire Fraud?

Mortgage wire fraud occurs when a scammer tricks a homebuyer into sending a wire transfer for closing costs to a fraudulent bank account. By the time the homebuyer realizes the money didn’t reach the intended account, such as one held by a title company, it may be difficult to recover the funds.

The National Association of Realtors identifies mortgage wire fraud, also known as real estate wire fraud, as one of the most prevalent cybercrimes in the U.S., leading to millions of dollars in financial losses annually.

How Does Mortgage Wire Fraud Work?

During the closing of a home purchase or mortgage refinancing, homebuyers are typically instructed to wire transfer closing costs. This money often goes to the title company managing the transaction. Closing costs can include:

• Mortgage application fees
• Escrow fees
• Appraisal fees
• Legal fees
• Courier fees

Closing costs can range from 2% to 5% of the loan amount. For instance, on a $300,000 mortgage, closing costs might total between $6,000 and $15,000. Mortgage wire fraud can also involve the down payment for a home or funds to pay off a mortgage.

Typical Mortgage Wire Fraud Scheme

Before a transaction is completed, a hacker may send phishing emails containing malware to title company employees, real estate agents, or other real estate professionals. These emails might also target homebuyers or sellers. When someone clicks on a link in the phishing email, the hacker can access an email account and gather information about pending real estate deals, including closing dates.

With this information, the hacker can impersonate a real estate professional and send a fraudulent email to the homebuyer, informing them of a change in wire transfer instructions and advising them to send money to a different bank account. Once the money is transferred, it is typically funneled to a fraudulent U.S. bank account and quickly withdrawn via cash or check. The funds may then be deposited into another U.S. bank account or an international account.

How to Protect Yourself From Mortgage Wire Fraud

Follow these steps to help protect yourself from mortgage wire fraud:

Be Careful With Email Attachments

Regardless of the sender, be cautious about opening attachments, clicking on links in emails, or downloading files. Anything you download might contain malware that gives a hacker access to vital information.

Update Your Technology

Ensure your security software, web browsers, and operating system are equipped with the latest updates to help prevent hacking attempts.

Nail Down Contact Information

Make sure you have phone numbers and other contact information to confirm a wire transfer for a mortgage transaction. If you receive an email informing you that someone’s phone number or other contact information has changed, call the original number to double-check.

Set Up Special Codes

To enhance security, use a secret word or phrase that only you and key people, such as your real estate agent, are aware of. Don’t mention the word or phrase in any emails.

Be Suspicious of Last-Minute Changes

If you receive an email alerting you to last-minute changes for a wire transfer, don’t respond immediately. Instead, call a verified phone number, such as one for the title company, to confirm the wire transfer instructions.

Call Before Initiating a Wire Transfer

Before sending thousands of dollars via a wire transfer, call the title company or lender to verify the account name, account number, and other details. Additionally, ask the company carrying out the wire transfer, such as your bank, to double-check the name and number of the recipient’s account.

Verify the Wire Transfer

Once you’ve sent the money through a wire transfer, call the appropriate parties (like the title company) to ensure they received the correct amount of funds.

What to Do if You’re a Victim of Mortgage Wire Fraud

If you believe you’re a victim of mortgage wire fraud, take these steps as soon as possible:

• Contact your financial institution or the wire transfer company to request that the wire transfer be reversed and that your money be refunded. You may be able to recover some or all of your money, but only if you act quickly. Remember, wired funds aren’t insured and are difficult to recover if they’ve already landed in a foreign account.
• Reach out to your real estate agent, title company, and others involved in your transaction.
• File a complaint with the FBI at www.IC3.gov.

The Bottom Line

A mortgage transaction generally involves tens or even hundreds of thousands of dollars. Therefore, it’s crucial to do everything you can to prevent mortgage wire fraud. If you do become a victim of mortgage fraud, don’t delay in taking action. Acting quickly may make the difference between recovering and losing your money.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you navigate the mortgage process safely and securely.

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