Advances in technology have made the home closing process easier than ever before, with eClosings becoming more and more common. However, technology has also made the closing process more vulnerable than ever to cyber criminals and scammers. The large amounts of money and sensitive information involved in real estate transactions make them a natural target for theft. As your closing partner, Two Rivers Title has some helpful information on how these scammers can compromise your home purchase, steps you can take to protect yourself, and what to do if you think you have become a victim of cyber crime.
Mortgage Wire Fraud
Mortgage wire fraud is the largest cyber threat to the home closing process in the United States, and this epidemic is only continuing to grow. According to the FBI, almost $1 billion was “diverted or attempted to be diverted” from real estate purchases through wire fraud in the 2017 fiscal year, up dramatically from $19 million in 2016.
Here’s how it works. Computer hackers will gain access to a financial institution or other company involved in real estate transactions. They then wait for an upcoming home purchase. At some point in the closing process, they will pose as the real estate professional and email the home buyer with instructions to wire the down payment to their own account. This will typically be a last-minute change to the existing wire transfer arrangements you have already made.
How to Protect Yourself from Cyber Risks During the Closing Process
Anyone purchasing a home should take the following precautions to avoid cyber risks such as wire fraud.
- Discuss all procedures for transferring money with your realtor or settlement agent ahead of time. Be wary of any later changes to this procedure, and confirm any changes with your realtor or settlement agent before proceeding.
- If you receive an email with any instructions for transferring money, or changes to the established procedures, DO NOT reply to the email. Call your realtor or settlement agent to discuss this, using a verified phone number (NOT a phone number contained in the email). If possible, try to speak to them in person.
- Do not click any links in these emails, as they may contain malware that can compromise your computer’s security.
- Do not email any financial information to anyone.
- Before sending any wire transfer, talk to your bank about identifying any potential red flags in the wiring instructions. Your bank may be able to verify the receiving account information.
- Contact your realtor or settlement agent within a few hours of the wire transfer to confirm that they received it.
What To Do If You Are a Victim of Cyber Crime
If either you or any other party involved in the closing process suspects a problem, it is important to act fast for the best possible chance of recovering your money. The Consumer Financial Protection Bureau advises homeowners who are victims of cyber crime during the closing process to take the following steps:
- Contact law enforcement and your bank or money transfer company immediately upon discovering that your money has been sent to the wrong account.
- Contact your local Attorney General and FBI offices.
- File a complaint with the FBI’s Internet Crime Complaint Center, no matter the dollar amount.
- Report the crime to the Federal Trade Commission.
At Two Rivers Title, we take cyber risks seriously. We also offer cyber insurance coverage. If you are buying a home and want to know more about protecting yourself against cyber crime, contact us today to discuss your options.