How To Beware Of Mortgage Wire Fraud During Closing
January 25, 2024 6-minute read
Author: Victoria Araj
A new breed of scammers is taking advantage of homeowners during the stressful closing period. And if you aren’t careful, you too could lose your closing fund.
What Is Wire Fraud In Real Estate?
Mortgage wire fraud is a scam in which a hacker poses as your real estate agent and convinces you to divert your closing costs to a fraudulent account. Mortgage wire fraud relies on a complicated hacking technique called phishing. In a phishing scam, a hacker uses fake emails, phone numbers or websites to impersonate someone you trust.
The truth is that the address the scammer gives you will go straight into their pockets. Once you initiate a wire transfer, it’s very difficult to get your money back. Mortgage wire fraud can leave you thousands of dollars in debt and delay your closing.
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How Does Wire Fraud Work?
Let’s go through a common script a scammer might follow to help you better recognize a wire scam.
“URGENT: New Instructions For Wiring Your Closing Funds.”
Panicked, you open the email. The message looks legitimate: It’s from your real estate agent’s email address, it has their signature and it addresses you by name.
What Can I Use To Identify Fraud And Avoid It?
Watch out for these red flags to prevent mortgage wire fraud.
Know Your Closing Process
Understanding your closing process before your money is due can help you avoid scams. Speak with your real estate agent in person or over the phone and discuss how you’ll complete the closing process.
Write Down Contact Information
You should have a couple of contact methods for everyone involved in your closing transaction. This includes your lender, your real estate agent, your attorney and your settlement agent. Write down each party’s name, phone number, email address and any other form of contact information you have.
Beware Of Last-Minute Closing Changes
Scammers cause confusion and panic to convince you to go against your better judgment and wire money to an undisclosed party. Be wary of anyone who urges you to act fast or send money immediately, especially if the request comes over email.
Call To Confirm Any Wiring Instructions
Don’t follow up on any emails with wiring instructions, even if the letter looks legitimate. Contact a trusted representative either in person or over the phone and ask them to confirm the account number and name. Your lender should be able to repeat the name on the account, the amount due and the account number over the phone without prompting.
Never Email Your Financial Information
Email is never a safe way to transmit your financial information. Phishers can use this information against you later after a hack, even if you’re emailing someone you trust. Stick to in-person meetings or phone conversations to share important information.
Be Wary Of Phone Conversations
Thanks to spoofing, it can be difficult to distinguish whether a phone call is a scam or legitimate. A scammer might call you and tell you that they have information for you but they need to confirm your identity first.
Action To Take If You Believe You’ve Been Scammed
Take a deep breath and follow these steps if you think you’re the victim of mortgage wire fraud.
Contact Your Bank Or Wire Transfer Company Immediately
Contact your bank or wire service if you have any inkling that you’re not sending money to a trusted party. Request a wire recall as soon as possible after you make the transaction. In some cases, you may be able to get the money back that you sent – but only if you act fast.
File A Complaint With The FBI
The FBI has an internet crime division that might be able to help you if you’re a victim of fraud. You can contact the FBI’s Internet Crime Complaint Center and submit a report. The more information you include in your report, the more likely the FBI will be able to help you.
The Bottom Line
Mortgage wire fraud is a serious issue that can put your closing costs at risk. Scammers use techniques like phishing and spoofing to convince you via email or phone that you’re communicating with a trusted agent or lender. The scammer then tells you that there’s been a change in closing procedures and that you must wire money to a new account. In actuality, the account belongs to the scammer. Once you send the money, it’s very difficult to get it back.
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