Escrow Wire Fraud

Escrow wire fraud has claimed $6.9 Billion in victim losses in 2021, with an average of 2,300 complaints per day and 552,000 complaints per year over the past five years. Internet Crime Report 2021 (link is external) (Federal Bureau of Investigation, 2021) Real estate wire fraud is still one of the most common cybercrimes in the United States. In 2020, 13,638 people were victims of real estate and rental wire fraud, which resulted in losses of more than $213 million, according to data from the FBI. This places real estate and rental wire fraud at number seven among the more than 30 kinds of fraud that the FBI’s Internet Crime Complaint Center monitors.

During the stressful closing period, homeowners are being taken advantage of by a new breed of con artists. Additionally, you may also lose your closing fund if you are careless.

What is real estate wire fraud?

A scam known as mortgage wire fraud involves a hacker posing as your real estate agent and persuading you to transfer your closing costs to a fictitious account. Phishing is a complicated hacking strategy used in mortgage wire fraud. A hacker uses phony emails, phone numbers, or websites to pretend to be someone you trust in a phishing scam.

An email address or phone number that resembles the one used by your real estate agent or lender might be used by a con artist engaged in mortgage wire fraud. These texts and emails may appear genuine and even include personal information that only a close friend or family member would have. Obviously, the con artist first phishes your agent’s inbox for your personal information.

Spoofing is another strategy used by con artists to appear more trustworthy. Spoofing is when a con artist uses special software to pretend to be your lender, agent, or email. It can appear as though you are conversing with someone you trust when a con artist calls or emails you from a spoofed account.

The intention of mortgage wire fraud is to transfer your closing costs into the con artist’s own account. The con artist might claim that their banking procedures have been altered at the last minute. Additionally, they might inform you that the initial address they sent was incorrect.

The fact of the matter is that the address that the con artist gives you will directly fund their activities. It is very difficult to get your money back after you initiate a wire transfer. Mortgage wire fraud can delay your closing and put you in debt for thousands of dollars.

It’s easy to assume that you won’t get scammed. Sadly, mortgage wire fraud is much more prevalent than many people are led to believe.

The Federal Trade Commission’s data show that between 2015 and 2017, attempts to commit mortgage wire fraud increased by 1,100%. Swindlers caused over $1 billion in losses to consumers in real estate transaction costs alone in 2017.

Business Email Compromise/Email Account Compromise (BEC/EAC) was the type of real estate fraud that received the most reports in 2020. Fraudsters will forge the person’s email address and other transaction-related information while assuming the identity of the title, real estate agent, or closing attorney. The con artists will then send an email with new wire instructions to the criminal’s bank account to the unwitting buyer.

BEC/EAC scams targeting the real estate industry continue to rise, according to victim complaint data. The Internet Crime Complaint Center has received reports of such activity from victims participating at all levels of a real estate transaction. Between 2015 and 2017, the number of BEC/EAC victims reporting the real estate transaction angle and the reported monetary loss increased by almost 2200 percent.

How does Escrow Wire Fraud work?

Any situation in which a person is tricked into sending money to a fraudster via wire transfer is referred to as escrow wire fraud. Imposter scams, debt collection schemes, and identity theft are all examples of wire fraud. Wire transfer fraud also targets real estate transactions.

How is an escrow wire fraud scheme carried out?

Scammers frequently gain access to the network of a title company in order to obtain emails and information regarding a forthcoming home purchase.

Once they have that, they will typically set up a fake website under a name that is similar to the one used by the home buyer or seller you are working with. The con artists will then send you an email with instructions on how to wire the money necessary to close on the house.

What Impact Does Wire Fraud Have on the Title Business?

Every year, thousands of homebuyers fall prey to wire fraud. The increasing digitization of the title industry is the cause of this. The problem is getting worse, and more and more people are falling prey to it.

The following advice from the National Association of Insurance Commissioners (NAIC) can help keep you safe and secure:

Obtain the names, email addresses, and phone numbers of your real estate agent, lender, title insurer, and closing and settlement agent at the beginning of your transaction. Only use these numbers and email addresses to communicate with the other parties during the transaction.

Make sure your email account supports two-factor authentication and encourage other participants in the transaction to do the same.

Before your transaction is scheduled to close, your title/closing agent will send wire instructions. Be sure to check the wire instructions with the title/closing agent as a buyer by calling them or talking to them in person. Because email accounts can be hacked, you should double-check any information you get from direct communication.

Pay attention to any correspondence or email that prompts you to respond immediately or in a hurry. This is not how title companies will request a wire transfer. Any communication that claims to contain updated wire transfer information should be treated with extreme caution.

To ensure that the wire transfer reached the intended recipients, always confirm receipt a few hours after it was sent.

Check with your state insurance department to see if your title insurer is licensed and in good standing.

Mortgage wire fraud is a serious problem that could cost you money at the closing. Scammers use phishing and spoofing to trick you into thinking you’re talking to a reputable agent or lender over the phone or email. The con artist then tells you that closing procedures have changed and that you need to wire money to a new account. The account actually belongs to the con artist. It’s very hard to get the money back once you send it.

You can keep yourself safe from con artists in a few different ways. Ensure that you personally confirm your closing details and gather valid contact information. Be wary of requests to send money quickly and avoid sharing private information via email. If you think you’ve been the victim of a scam, get in touch with your bank or wire company and ask for a recall of your wires. Additionally, you ought to file a complaint with the IRS Criminal Investigation.

How is wire fraud carried out?

To help you recognize a wire scam more effectively, let’s go over a typical script that a con artist might use.

Let’s say you’re buying a house and are now ready to get your loan approved. You have finalized all of the details of the closing and know precisely how much you owe at the closing. A sudden email arrives in your inbox a few days before the deadline: 

“URGENT: New Guidelines for Wiring Your Closing Funds 

You open the email in panic. The message appears to be genuine: It is addressed to you by name, comes from the email address of your real estate agent, and includes their signature.

The email informs you that your closing contains an error. You must now wire the money directly to your lender rather than bring a check to the closing. You are urged to move quickly by your “agent.” It is said that you may lose your home if you do not act quickly. A new wire transfer address is also included in the email. You send the money over immediately out of panic.

Your real estate agent does not contact you until a few days later to inquire about your prepared closing costs. You inform your agent, perplexed, that you have already wired the money. The agent gets in touch with your lender and finds out that the lender never got any money from you.

The person you’ve been corresponding with via email is not your agent; rather, it is a con artist using a fictitious email address. Using phishing software, the con artist gained access to your agent’s email and discovered a wealth of useful information about you, your loan, and your closing costs. After that, the con artist opened a fictitious bank account and persuaded you to send money to them rather than your lender.

Swindlers involved in mortgage wire fraud frequently employ this scenario. Scammers can send emails to you from addresses that appear to be legitimate and can be convincing. They might even fake the phone number of your agent. You can protect yourself and make it safely to the end by remaining cautious and being aware of the most recent phishing techniques.