Mortgage Wire Fraud: Protecting Your Home and Finances

While the electronic transfer of funds and other online financial options make it so much more convenient to do business such as buying a home, it is not without fault, which often comes to light in the form of mortgage wire fraud. It is important for home buyers to protect their money from scammers by being educated about the real threat of these criminals.

Understanding the Threat of Mortgage Wire Fraud

Mortgage wire fraud is becoming more popular with scammers as we lean on technology to help us make financial transactions. The unscrupulous thieves trick home buyers into sending their closing costs or down payment funds to a fraudulent account created just to take their money. They often impersonate a title representative or escrow officer by calling or sending a correspondence via text or email to the buyer indicating that they have new information about where to send the money, which is directed to them instead of the legitimate contact.

Once the money is sent, the transaction is almost impossible to reverse and the money is lost, which is often devastating to the home buyer. Unsuspecting home buyers have sadly lost over a billion dollars to mortgage wire fraud.

How Mortgage Wire Fraud Works

Because fraudsters are good at their jobs, mortgage wire fraud scams are not always so obvious, so it’s important to know what to look for when buying a home.

Scamming Tactics for Mortgage Wire Fraud

• Be careful of the spoofing technique, where the scammer creates emails or phone numbers that may look like that of your Realtor or banker. Although this correspondence may look legit with personal information no one should know, it can be coming directly from the fraudster with information phished from your lender or agent’s email account.
• Receiving a message indicating you sent the funds to the wrong account and warning that if you don’t wire the money immediately could result in you losing the house is popular way scammers get home buyers to react quickly. Don’t fall for it.
• Any last minute request to do anything that pertains to transferring funds should be considered a red flag. These last minute or emergency changes may indicate a scam attempt. Be sure to verify these changes immediately with someone you know and trust, like your Realtor or banker.

3 Ways to Protect Your Home Purchase from Wire Fraud

1. It is crucial to understand the closing process to avoid scammers. Get to know your Realtor and lender by meeting and speaking in person about the details of the closing process and exactly what you should expect. Discuss the closing process directly versus via email as much as possible. This will stop phishers from gaining personal information to assist in their fraudulent activities.
2. Secure the wire transfer details and safe payment methods directly from your lender. Savvy home buyers may even consider setting up a code word for trusted mortgage parties to use to confirm their identity when discussing funding changes.
3. Gather information about everyone involved in your closing including the lender, Realtor, attorney, and settlement agent. From their name and phone number to their email address and other forms of contact – ensure you can reach one of them directly if you have concerns about wire fraud.

Secure Banking Practices

Practicing secure banking practices is the best way to protect yourself from wire fraud. Consumers should avoid using email communication when discussing finances, as this opens the door to phishing scams and spoofing. Also, be aware of what you post on social media, as public profiles can share useful information for potential scammers. And, for extra account security, be sure to use the multifactor authentication option, a multistep login process for your bank account that requires users to enter additional information in addition to their password for account access. This combined with a strong account password is a savvy move to secure your money.

Reporting Suspicious Activity

If you suspect you are the victim of a mortgage wire fraud scam, contact your bank or wire service provider immediately and ask for a wire recall. Quick reporting and a timely explanation will give you a better chance of getting your money returned.

Next, you should contact the FBI’s internet crime division to report the fraud at their Internet Crime Complaint Center to file a report for their assistance in the return of your funds. And finally, you should contact your local police to file a report about the theft.

Preventative Measures

Being aware of the various techniques fraudsters use for mortgage wire fraud is the first step in protecting your money. Securing your bank accounts to implement cybersecurity best practices and staying vigilant throughout the home-buying process by verifying any changes, staying in constant communication with your mortgage lender and Realtor, and acting on any red flags will help your home buying process be a smooth one and keep your money safe.

Related: 7 Expert Tips for Staying Safe Online & Avoiding Financial Scams