Preventing Mortgage Wire Fraud

Preventing Mortgage Wire Fraud

July 15, 2021
Share |

Recently we have seen stories in the news about a rise in mortgage wire fraud. Together with LPL, we have developed procedures to protect our clients from these types of schemeswhen we send 3rd party wires on your behalf to your mortgage lender. However, it is important you educate yourself on the nature and types of behaviors scammers use so you don’t fall victim to their methods. Please read the key information below to help arm yourself against this particular type of fraud.

How does mortgage wire fraud happen? Scammers try to take advantage of the hectic nature of real estate and business closings in an attempt to trick you into changing wire instructions for a legitimate transaction in order to divert funds to a false location. According to the FBI, the increasing level of wire fraud schemes that compromise business email related to such third-party transactions has resulted in losses to customers in excess of $1 billion annually.

Mortgage wire fraud is a scam in which a hacker poses as a real estate agent or lender and convinces you to divert the closing costs to a fraudulent account. This type of wire fraud relies on a hacking technique called “phishing.” In a phishing scam, a hacker uses fake emails, phone numbers, or websites to impersonate someone you trust. A mortgage wire fraud scammer might use an email address or phone number that looks like the one a real estate agent or lender uses. The scammer phishes the client’s personal information out of their email beforehand, and the emails and texts sent by the scammer look authentic and may contain this personally phished information.

Scammers might also use a technique called “spoofing” to make themselves seem more legitimate. Spoofing occurs when a scammer uses special software to mimic the agent’s or lender’s phone number or email. When a scammer calls or emails your client from a spoofed account, it can look exactly like they are talking to someone they trust. The goal of mortgage wire fraud is to get your closing funds into an account that the scammer owns. The scammer may tell you that there’s been a last-minute change in banking procedures or that they sent the wrong address the first time.

Always verbally confirm any instructions with your real estate agent or lender. LPL will employ the same process and require a verbal confirmation from you before processing any third party wires from your account. Below are some additional tips provided by consumerfinance.gov  to protect yourself against business closing or mortgage wire fraud schemes.

Tips to Protect Yourself

  • 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 Consumer Financial Protection Bureau’s Mortgage Closing Checklist to list these individuals and their primary phone numbers.
  • Before wiring money, always verbally 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 verbally with your trusted representatives.
  • Never 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 at a previously agreed-upon phone number or in person to confirm whether it’s legitimate.