{"id":1410,"date":"2021-05-17T10:00:17","date_gmt":"2021-05-17T14:00:17","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1410"},"modified":"2024-04-25T23:20:01","modified_gmt":"2024-04-26T03:20:01","slug":"fraud-update-closing-scams-now-make-up-nearly-half-of-cybercrime-losses","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/fraud-update-closing-scams-now-make-up-nearly-half-of-cybercrime-losses\/","title":{"rendered":"Fraud Update: Closing Scams Now Make Up Nearly Half of Cybercrime Losses"},"content":{"rendered":"\n
\"The<\/figure><\/div>\n\n\n\n

What\u2019s a closing scam? Consider the Colorado home buyer who, a few weeks back, opened an email from the title company<\/a>. It contained precise instructions for wiring the closing money. The amount requested \u2014 about $80,000 \u2014 matched the amount the title company had already discussed. Everything looked legit.<\/p>\n\n\n\n

Two days later, the title company was requesting the money.\nWhy hadn\u2019t it been received? Because those wiring instructions weren\u2019t from the\ntitle company after all. Criminals had insinuated themselves into the company\u2019s\nemail accounts, impersonated the title agent, and diverted the funds. <\/p>\n\n\n\n

When a buyer is stung by fraud, money is hard to get back, says the American Land Title Association (ALTA). This buyer was fortunate. Redfin\u2019s Title Forward escrow and settlement subsidiary<\/a> sprang into action. Title Forward brought in CertifID Funds Recovery Services and the Secret Service. The buyer recovered the 80K.<\/p>\n\n\n\n\n\n\n\n

Why Is Closing Fraud Spiking Now?<\/h2>\n\n\n\n

There\u2019s an extraordinary level of competition for homes in this unremitting seller\u2019s market. In Ohio, for example, home sales in March 2021<\/a> are up more than 3% year-over-year, with the average Ohio home selling for more than 10% higher than last year\u2019s average. The challenge of buying in this market can unnerve the most levelheaded buyer. And the value changing hands is greater than ever.<\/p>\n\n\n\n

Not surprisingly, identity thieves are targeting a market\nfilled with big-ticket buys and stressed-out borrowers. Fraud in the housing\nfield is becoming more sophisticated, and it\u2019s finding many entry points as more\nelements of real\nestate transactions go remote<\/a>. <\/p>\n\n\n\n

The results of this perfect storm? The Secret Service says\nit\u2019s a sharp rise in real estate crimes in 2021.<\/p>\n\n\n\n

Companies Are on Cybersecurity Learning Curves<\/h2>\n\n\n\n

There\u2019s alarming news in the 2021 Wire Fraud and Cyber Crime Survey<\/a> from the American Land Title Association. Real estate professionals are being targeted for wire fraud in a third of the home and mortgage transactions they handle. ALTA says agents are learning to spot these diversion attempts. The agents wired money to fake accounts in just 8% of the total recorded attempts. Still, that\u2019s a lot of diverted money! The startling reality? Closing scams now represent close to half of the total losses from cybercrime.<\/em><\/p>\n\n\n\n

Obviously, the industry needs more robust data security. Redfin\nis a big company, and its Title Forward subsidiary has a working awareness of\ncybercrime. Smaller companies with fewer resources are going to need to\nprioritize security. This means all companies in the real estate industry\nshould run regular data security assessments, purchase cybersecurity insurance,\nand implement basic safeguards to protect their data and email systems. <\/p>\n\n\n\n

And real estate agents, who do not handle closing funds,\nmust make it clear to buyers that they will not be sending wiring instructions.\nBuyers should know that messages from real estate agents requesting money\naren\u2019t the norm. Which leads us to\u2026<\/strong><\/p>\n\n\n\n

How Buyers Can Guard Their Funds<\/h2>\n\n\n\n

As the industry comes the grips with this issue, what\nself-protective measures can a buyer take? Here are the key recommendations\nfrom Rocket Mortgage, the American Bankers Association, the National\nAssociation of REALTORS\u00ae, and others in the title and lending sphere:<\/p>\n\n\n\n

1. Know Your Closing Procedures.<\/h3>\n\n\n\n

Preparing for the closing process in advance will make\nyou safer. Learn from your mortgage specialist in advance about how the wiring\nprocess will go. Write down every step, including the details on who will call\nwhom when money needs to move.<\/p>\n\n\n\n

\u261b<\/em><\/strong> <\/em><\/strong>Preparing to close on your new home?\nCongrats! See The Home Stretch: A\nBuyer\u2019s Guide to Closing Like a Pro<\/a> on Deeds.com.<\/em><\/strong><\/p>\n\n\n\n

2. Organize Your\nContacts.                                                <\/h3>\n\n\n\n

Keep a private directory of contact information including\nthe best phone numbers for people involved in your home purchase. Call those\nnumbers when you need them \u2014 not <\/em>numbers that come in texts or emails.  If someone whose voice is unfamiliar calls and\nasks you to verify financial or personal details, call your mortgage specialist\nto confirm the request. Use the number from your own directory. <\/p>\n\n\n\n

3. Know the #1 Wire Fraud Red Flag.<\/h3>\n\n\n\n

The major red flag is an email with wiring instructions.\nEven if it includes details the sender would know, and seems perfectly valid in\nevery way, receiving wiring instructions this way is suspect. Stop, don\u2019t\nclick. Initiate your own call to your representative to verify what\u2019s you\u2019ve\nreceived. Open hyperlinks or attachments only when you are sure the email is\nreally from your representative.<\/p>\n\n\n\n

4. Verify Financial Instructions Before\nFollowing Them.<\/h3>\n\n\n\n

Be on the lookout for any late changes to previous\ninstructions. Changes, too, can be red flags. Before submitting data, check the\ninstructions and account details by making a quick call to your mortgage\nrepresentative or the escrow agent receiving the information. <\/p>\n\n\n\n

5. Verify Receipt of Wired Funds. <\/h3>\n\n\n\n

Have you wired your funds for closing? Check in with your\nmortgage specialist or the escrow agent who\u2019s receiving the money. You should\nknow within eight hours that the funds safely arrived. <\/p>\n\n\n\n

Home buyers who run into attempted diversions of funds should\nimmediately alert their bank. They should also call their mortgage specialist\nor title company, and the FBI\u2019s Internet Crime\nComplaint Center<\/a>. <\/p>\n\n\n\n

Be Aware of Unscrupulous Financing Practices<\/h2>\n\n\n\n
\"Image<\/figure><\/div>\n\n\n\n

Home buyers are sometimes targeted by high-pressure\nsalespeople touting guaranteed low loan rates and speedy loan approvals with no\nregard for credit. They may press the buyer to immediately submit information\nand payments. Steer clear. Reputable lenders don\u2019t advertise high-risk mortgages.\nShady companies are out there, taking advantage of hopeful home buyers by\npromising loan approvals now and refinancing later. These services may charge\nsuch high fees that a low-rate loan can be a rip-off.<\/p>\n\n\n\n

And even if you\u2019re working with an excellent mortgage\ncompany, it\u2019s important to do your own due diligence. This means:<\/p>\n\n\n\n