Protect Yourself from a Mortgage Closing Scam
Fraud targeting wire transfers during the mortgage closing process has sharply increased. If you’re preparing to buy a home, here’s what you need to know about these scams so you can protect the money you’ve saved for this important purchase.
Mortgage closing scams continue to be a threat to home buyers. According to the FBI, victims lost $221 million to real estate wire fraud in 2019. That figure rose from $150 million in losses in 2018. Criminals are becoming more sophisticated in staging fraudulent real estate transactions and they're having more success getting away with the money.
How it works
Real estate and title companies are targeted by scammers who may be able to break in to their email platforms. Once these criminals have gained access, they can send seemingly legitimate emails to clients who are in the mortgage closing process. Through these communications that impersonate the title or real estate company, they provide clients with instructions about how and where to wire funds.
Victims unknowingly wire their closing funds to a fraudulent account, never to be seen again. These accounts set up by fraudsters are typically emptied and closed by the time anyone realizes the fraud has occurred.
Know what to expect
Your title company, real estate agent, and lender can advise you about what to expect from their wire transferring instructions and email communications so you can be confident your real estate transaction will be secure. Read below for recommendations and precautions to help protect you throughout the closing process.
Before wiring funds
- Confirm wiring instructions. Contact the title company using the phone number or email address from the website or a business card.
- Request your transaction information sheet from the title company.
- Don't reply to email. Forward the message and manually enter the email address to respond.
- Be suspicious of emails telling you wire instructions have changed. Such changes are rare in the course of a transaction.
- Review wiring instructions with your financial institution. They may be able to identify discrepancies between account name and beneficiary name, and also check the receiving ABA routing number and account number against account numbers identified in past consumer fraud complaints.
When wiring funds
- Use a secure, encrypted email option. Follow title company instructions for using their secure email option. Your financial information is not secure when sent by email without encryption.
- Use a secure website portal. Send any items containing banking or other private information using a secure online portal if one is available. Mail, overnight service or hand-delivery are also secure options, but they could significantly slow the process.
- Be careful not to open email attachments that you aren't expecting, even if you recognize the sender. Opening an attachment could infect your computer or device with malware.
- Don't use free Wi-Fi or public computers for business transactions.
- Create strong passwords and change them regularly.
- Protect your computer with a firewall and up-to-date antivirus/malware software.
After wiring funds
- Confirm your wire transfer was received within a few hours of transmitting the wire.
- If you suspect a problem, report it to law enforcement and your financial institution within 24 hours to increase your chances of recovering the money.
Words to avoid in email
If you do communicate through email during the mortgage process, don't include financial terms in your email subject lines. Here are some specific words to avoid:
- Wire Transfer
Reporting an incident
- Federal Bureau of Investigation (FBI): fbi.gov
- Internet Crime Complaint Center: ic3.gov/
- If you have any questions, please contact a BECU representative at 800-233-2328.
Handout: Your mortgage closing checklist | CFPB
Video: What Homebuyers Need to Know About Mortgage Closing Scams | CFPB
Video: Protect Your Real Estate Transaction | First American Title Company
Video: Wire Fraud Alert | Fidelity Title Company and Chicago Title Company