Beware of Mortgage Fraud
Thursday, Sep 10 2020
Preparing to purchase your dream home is super-exciting. That’s partly because you’re choosing a property that maybe your home for the next few decades — or more! It’s also a time that’s jam-packed with activity and arrangements. In between looking at houses, you’re going to be consulting with your real estate agent, working with a mortgage broker, tying up loose ends in your current home, arranging for an inspection, and lots more. It’s enough to make anyone lose their head! While you’re busy tending to everything on your list, be careful not to let this hectic time turn into a breeding ground for something sinister…like mortgage fraud.
Beware of Mortgage Fraud
Yes, they’re at it again. This time, scammers are targeting hopeful new homeowners like you. Though this scam has been around for a while, a recent uptick in mortgage fraud means house-hunters need to be extra vigilant as they go about purchasing their new homes.
Here’s all you need to know about mortgage fraud:
How it works
You’ve picked out a property and worked out an agreeable price with the owner, so you’re ready to close the deal and move in. Your real estate agent and mortgage broker are in constant contact with you, telling you exactly what you’ll need to become the official new owner of the home. In the weeks leading up to the big day, you’re busily preparing for the closing.
Here’s where the hacker steps in.
If you’re targeted, you’ll get an email appearing to be from your real estate firm or your title company. The email looks just like any of the other you’ve been receiving and nothing stands out as suspicious about its address or sender. The message will tell you there’s been a last-minute change in the closing process. It will then instruct you to wire your closing cost fees to a specified account. Alternatively, it will ask you to share your account information so the company can withdraw the required amount on its own.
You probably know the script by now. The email is bogus and the account belongs to the scammer, who is eagerly waiting for you to take the bait and wire money directly into their hands. Sometimes, the hacker may even be bold enough to ask you to transfer your entire down payment to their account. In a matter of minutes, you can lose tens of thousands of dollars, with little hope of ever recouping the loss.
The hackers executing this scheme are clever. Instead of posing as a random real estate firm or title company, they crack the passwords of authentic companies and help themselves to vulnerable targets who are currently using these firms to purchase a new home. Since these companies are in constant contact with their clients, there’s little reason for the victim to be wary of these emails.
Red flags of Mortgage Fraud
Mortgage fraud may be played out cunningly, but you’re smarter than those scammers! Learn how to spot a fake email and hold onto your money.
Here’s what you’ll want to look for:
- Pre-closing payments. The fact that your “real estate agent” or “title company” is demanding payment before the actual closing is your first clue. Most closing-related fees are due on the day of the actual closing, not before.
- Wire transfers. Scammers love this payment method since it can rarely be canceled once it’s in process. Mortgage brokers and real estate agents on the other hand, won’t insist that you wire funds. They’ll happily accept a personal check or even cash.
- Email. Yes, your home-purchasing professionals will communicate with you via email, but they will never ask you to send financial information this way. They know – as should you – that email is never fully secure.
If you’re targeted
If you receive an email from your real estate firm or title company asking you to wire funds, do not respond. The email might appear to be from the actual company, but the only way you’ll know if it’s legitimate is by contacting the company on your own.
Do not click on any embedded links or respond directly to the email. Instead, open up a new message and email the professional you’ve been working with throughout the buying process. You can also call the company directly on the phone number you’ve been using to reach them all along.
Ask if there’s any legitimacy to this email. It’s unlikely that it’s authentic. When the scam is confirmed, take the following steps to protect yourself and others in the future:
- Delete the suspicious email immediately
- Alert your real estate firm and title company
- Tell your house-hunting friends about the scam
- Alert the FTC at ftc.gov
Don’t worry, you can still take steps to mitigate the damage if you’ve already wired the money.
If you’ve sent the money through Focus Federal Credit Union, be sure to call us about a wire recall as quickly as possible. If you’ve used a wire transfer company like MoneyGram, you won’t be able to reclaim the funds, but you can call their complaint line so they know to be suspicious of money being transferred to the scammer’s account.
It pays to be extra vigilant even during this hectic, fast-moving time. Don’t let this exciting time become a nightmare!