Scammers are beefing up their game and defrauding home buyers by misdirecting closing dollars to illegal accounts.

In the Greater Cincinnati area, title companies work in the background.  Their work begins right after you have an accepted contract with title searches, helping to clear liens, and continues until after the closing.  The actual closing takes a lot of prep work following the lenders and legal dictates.  Think of a football team taking the ball from the 10-yard line and moving it across the goal line.

As part of your closing funds need to be electronically transferred to the title company.  Closing costs often include down payments and money to cover additional fees and expenses.  In short, it can be a chunk of change.

Title companies work diligently to avoid fraud but most of your communications with them are via email or phone.  And we know a lot of emails are not secure.  But until title companies invest tons of money into secured portals -we’re going to have to be extra careful to avoid wire fraud.

Understanding real estate wire fraud

Mortgage wire fraud is a scam where a hacker poses as your  Realtor® or Title Company agent and convinces you to divert your closing costs to a fraudulent account.

According to experts mortgage wire fraud relies on a hacking technique called phishing. In a phishing scam, a hacker uses fake emails, phone numbers, and/or websites to impersonate legitimate people

The title company works in the background with your Realtor® and lender.  Any sensitive private information the title company requires should be communicated directly with them.  Realtors® are aware of the problems with fraud and are super careful about not taking or transmitting personal information.  So if your agent says to contact the title company directly- it’s the right thing to do.

Remember scammers who run mortgage wire frauds might use an email address or phone number that looks like the one your real estate agent or lender uses.

These emails and texts can look authentic and even contain personal information that only someone you know would have. Of course, the scammer phishes your personal information out of out an unsecured email inbox beforehand.

Scammers might also use a technique called “spoofing” to make emails look more legitimate. Spoofing occurs when a scammer uses special software to mimic your agent or lender’s phone number or email. When a scammer calls or emails you from a spoofed account, it can look exactly like you’re talking to someone you trust.

The goal of mortgage wire fraud is to get your closing costs into an account that the scammer owns.

Quite often the scammer tells you that there’s been a last-minute change in their banking procedures. They might also tell you that they sent the wrong address the first time.

The bottom line the wiring information provided by the scammer ensures your money goes straight into their pockets.  Mortgage wire fraud can leave you thousands of dollars in debt and delay your closing.

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How to avoid mortgage fraud

Be aware of the following red flags to prevent mortgage wire fraud:

Know Your Closing Process

Understanding the closing process before your money is due can help you avoid scams. Speak with the title company agent directly via phone to discuss the details.

Be very hesitant to “discuss” the closing process via unsecured email.  “Phishers” often use this information later to pose as someone from the lender or the title company.

Keep accurate contact information 

You should have a couple of contact methods for everyone involved in your closing transaction. This includes the lender,  real estate agent,  and title agent. Write down each party’s name, phone number, email address, and any other form of contact information you have.

(Or use the Consumer Financial Protection Bureau’s Mortgage Closing Checklist to store this information)

Don’t email financial information

Email is never a safe way to transmit your financial information. Stick with in-person meetings or phone conversations to share important information.

Call and confirm wiring instructions

Double-check and follow up on any emails with wiring instructions.  Contact the title agent via phone to confirm the account number and name.   And remember the contact list you made- call the number on your list -not the number on the email.

Question last-minute closing changes

Scammers love to cause confusion and panic.  At the last minute, they may change wiring instructions or additional costs that need to have money wired.  Be on the defensive and talk to the title company to confirm any changes.

Your Realtor® is also playing offense to keep the closing on schedule.  In order to minimize having your personal information in too many places, many real estate agents direct you to contact the source directly.  They watching the closing information along with you- but it’s hard to tell if you’re receiving the same information if a scammer is involved.

 Detecting and stopping wire fraud is a team effort!