Mortgage Closing Scams: How to protect yourself
How it works
Scammers are increasingly targeting real estate professionals, seeking to comprise their email in order to monitor email correspondences with clients and identify upcoming real estate transactions. During the closing process, scammers send spoofed emails to home-buyers, posing as the real estate agent, settlement agent, legal representative or another trusted individuals – with false instructions for wiring closing funds.
How to avoid a mortgage phishing scam
Identify two trusted individuals to confirm the closing process and payment instructions. Ahead of your mortgage closing, discuss in person, or by phone, the closing process and money transfer protocols with these trusted individuals (realtor, settlement agent, etc.). Be cautious about exchanging any details about your closing over email. You may want to use this opportunity to also create a code phrase, known only by these trusted parties, if you need a secure way to confirm their identities in the future.
Write down their names and contact information. Use the Bureau’s Mortgage Closing Checklist to list these individuals and their primary phone numbers.
Before wiring money, always confirm instructions with your trusted representatives. Never follow instructions contained in an email. Verify the closing instructions, including the account name and number, with your trusted representatives either in person or by using the phone number you previously agreed to.
Avoid using phone numbers or links in an email. Again, scammers can closely replicate the email address, phone number and format of an exchange from your agents. Avoid clicking on any links or downloading attachments without first confirming with your trusted representatives.
Do NOT email financial information. Email is never a secure way to send financial information.
Be mindful of phone conversations. It may be difficult to identify whether a phone call is fraudulent or legitimate. Scammers may call and ask you to verify your personal or financial information. When in doubt, always refer back to your trusted professionals to confirm whether it’s legitimate.
The FBI has reported that scammers are increasingly taken advantage of home-buyers during the closing process. Through a sophisticated phishing scam, they can attempt to divert your closing costs and down payment into a fraudulent account by confirming or suggesting a last-minute changes to wiring instructions. In fact, reports of these attempts have risen 1,100 percent between 2015 and 2017, and in 2017 alone, there was an estimated loss of nearly $ 1 billion in real estate transaction costs.
What to do if it happens to you
Contact your bank or wire-transfer company immediately. Ask for a wire recall. Reporting the error as soon as possible can increase the likelihood that you’ll be able to recover your money.
File a complaint with the FBI. Contact the FBI’s Internet Crime Complaint Center at www.ic3.gov
While it can be easy to think you’ll never fall for a scam of this nature, the reality is that it’s becoming more and more common, and the results can be disastrous for eager homeowners. By being mindful and taking a few important steps ahead of your closing, you can protect yourself and your loved ones.
To learn more about the closing process, including how to prepare for your closing and common pitfalls to avoid, check out our Mortgage Closing Checklist . For information and resources for the each stage of the home-buying journey, visit the Bureau’s Buying a House tool.
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