This type of fraud has been increasing year over year. It is incredibly damaging because it can leave home buyers in a situation where they no longer have the money to purchase their home – at a time when the closing is very nearby.
Breaking Down the Scam
This is one of the most disturbing and financially damaging scams we’ve ever come across. The scam begins when hackers target title companies and real estate agencies, gaining access to their systems and laying in wait for the right time to strike.
Imagine, you are nearing the end of the home buying process. You have filled out dozens of forms and gone back and forth to accommodate requests from the lender, real-estate agent and title company. Your closing date grows near. You receive an e-mail that appears to be from your title company. The e-mail uses the exact same format, pictures and signature as the ones you’ve been seeing from your closing agent at the title company. Except this one isn’t actually from the title company. If you look at the details closely – you might notice that the sending address is made to look like it came from the title company, when in reality – it didn’t.
The e-mail will provide you with instructions for wiring your down payment, and the amounts will match up perfectly with what you were expecting. The scammer has access to all of your loan docs, which they access either through the title company or the real estate agency. You go to the bank and wire the funds, thinking you are one step closer to owning a new home.
A week passes – and it’s time to close on the property. You sit down at the title company or real-estate agency to complete the final signing. While going through the process, the closing agent informs you that the down payment is now required. You respond that you’ve already wired the down payment at their request – just last week. The closing agents face goes white with fear – because they are familiar with this scam and they’ve seen it or heard about it before.
As you put the pieces together and backtrack over your previous e-mails, you realize that you’ve been scammed. You rush to the bank to see if there is anything you can do, but they inform you that they cannot recall the wire transfer because too much time has passed. Your down payment is gone, and you won’t be getting it back.
How to Protect Yourself
Never, ever wire money without getting on the phone with your title company closing agent directly – confirming all details. Better yet – use a cashiers check for your closing and avoid wiring entirely. This scam has bilked consumers out of over $1 Billion per year since 2017. Because of the sophistication of this scam, even the most savvy and technically inclined people are capable of falling victim. In 2018, I – the ScamBlaster – personally lost $30,000 to this scam while purchasing a home. I didn’t think it could happen to me. I’ve seen every scam in the book – but a convincing last minute email that appeared to come from my title company closing agent sealed my fate as a victim of a scam that has risen by over 1,100 percent between 2015 and 2017 according to a recent ConsumerFinance.gov article about Mortgage Closing Scams.
I filed a report with the FBI and my local bank where I wired the funds from – but I never heard back from either (other than the FBI acknowledging they had received my report). Most times, there is no recourse for victims of this scam, which can often lead to people losing their entire life savings.
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