Stop Mortgage Wire Fraud: Here’s What You Need to Know
As phishing scams become more sophisticated, instances of mortgage wire fraud are on the rise, and homebuyers risk losing their down payment, closing costs, and even their home.
Mortgage fraud occurs when scammers trick the homebuyer into sending a wire transfer for closing costs or the down payment to a fraudulent account. Because things move so quickly during a home closing, the homebuyer does not always catch the problem until it's too late to get the money back.
Stop this from happening to you; understand what mortgage wire fraud is, how it works, how to avoid it, and what to do if you become a victim.
Understanding Mortgage Wire Fraud
Scammers target real estate professionals seeking to compromise their email to monitor email correspondence with clients so they can identify upcoming real estate transactions. The scammers then use this contact information to email, text, or even call the buyer. Texts and emails seem legitimate and may even contain your personal information.
Fraudsters most commonly target homebuyers towards the end of the closing process and often send an email that looks legit and includes an urgent message with new wiring instructions that direct the funds to a fraudulent account. Once the transaction is complete, recovering the money can be nearly impossible.
In Oklahoma, closing costs are approximately 2%-3% of the purchase price, not including the down payment. According to Zillow, the average Oklahomahome value is $183,733.
Recognizing the Signs of Mortgage Wire Fraud
Mortgage wire fraud works because these scams come at a time when you're distracted and excited, so you may not be as vigilant as you usually would be. Below are signs that a mortgage wire fraudster is targeting you.
Sudden Urgency: If you get a phone call or email saying you must do something unexpected right now, verify the facts.
Unexpected Change: While changes can happen in the mortgage process, changing bank accounts is uncommon. An unexpected change close to the closing can be a red flag.
Refusing Phone Calls: If your real estate agent or lender needs to make a change, they'll be willing to take a phone call. Requiring you to use email only is a red flag.
Unprofessional Writing: If you see odd phrases and spelling, think twice about the email. It may be from a foreign location, which is a red flag for a scam.
Inconsistent Amount: If the amount requested doesn't match what your agent told you, there is a problem.
Learn How to Protect Yourself
Anyone can be a victim of mortgage fraud, and scammers are getting increasingly savvy. While you need to be vigilant to spot the red flags, scams can still get past your radar, and additional prevention is essential.
7 Preventative Measures to Protect Against Mortgage Wire Fraud
- Make sure you have up-to-date software on all of your devices.
- Before you get close to closing, get contact information from all parties, like your agent or title company. Then, if you do get an email request for a wire transfer, call the sender at the number you already have on file for them, not the number in the email, to verify that they sent the request.
- Double-check account numbers and avoid simply clicking links.
- Always verify changes to payment instructions and confirm requests for transfer of funds from any party – especially last-minute wiring changes from financial institutions.
- Slow down. Moving too quickly and not verifying information leads to mistakes.
- Err on the side of caution. Assume anything suspicious is fraud.
- Never reply to a suspicious email or act on any information in the message. Pick up the phone. Call all parties involved in the transaction using previously known, verifiable phone numbers before closing. Do not just confirm that the wiring instructions have changed; verify that the account information in the instructions is correct.
Learn How to Spot the Red Flags of Mortgage Wire Fraud
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A "Rush Request" to wire funds. Closing dates are subject to change, but this could also be a red flag. Your loan officer will always take your call, but make sure you contact them using a verified number, not a number on the request.
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Use of free, web-based email accounts for business transactions. These accounts are easily breached.
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Pay careful attention to all email addresses throughout the transaction to make sure they are legitimate. Hackers often email from unsecure domains or fake domains that closely resemble real ones to trick their victims.
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Misspellings, grammatical errors, requests for secrecy, and unnecessary or outdated words or vocabulary. If odd, incorrect, and suddenly different than previous communication, then that's a red flag.
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The person insists on communicating by email only. Remember, you are sending your money; if they refuse to talk to you by phone or in person, that's wrong. Follow up on any electronic requests by calling a verified number.
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Emails that arrive at odd hours of the day or night.
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Unusual payment amounts or requests to odd parties, unusual persons, or international wires. Review the name(s) on all bank accounts. Does it match the name(s) of the party(ies) involved? Is it worded strangely? Are the amounts consistent with what you've been told?
Immediate Steps to Take if You Suspect Fraud
If you suspect you are a fraud victim, act as soon as you notice the problem.
1. Contact your financial institution to see if you can stop the transfer. If you act quickly enough, you may be able to get your money back.
2. Contact your real estate agent, the title company, and anyone else involved. If you cannot recover your funds with these steps, get an attorney on board.
3. Inform authorities:
a. File a complaint through the FBI Internet Crime Complaint Center.
b. Contact the Federal Trade Commission (FTC) to report wire fraud.
c. You can also report it to the FBI Fraud Tip Line.
Remember, anyone can be a victim of this common crime. If you find yourself in this challenging situation, the faster you act, the better. Avoid falling victim by taking the necessary precautions and watching for red flags.