Featuring Guest Author: Ally Gelhaar, Loan Officer Residential Real Estate Buying a home is one…
The Risks of Mortgage Fraud
As technology advances, more and more transactions such as down payments, earnest money deposits, and mortgage payments are completed through electronic wire transfers. While this is a faster and easier way to send payments than a check, many criminals have used this as an opportunity to commit mortgage fraud or steal money.
Watch this video and follow these critical steps that will help make sure you do not become a cybercrime victim.
1. Choose a Secure Wire Transfer Method
Never accept wire instructions via email or phone. Any professional hacker or phisher can mask themselves as someone else and create a fake email or phone number to retrieve your personal information. When accepting wire instructions, set up an in-person meeting or call the escrow company directly. From the documents you were given, look for a phone number to reach them. On the other hand, an email can also raise suspicious flags. If this occurs, call the escrow company to confirm the email address of the sender. Even a minor typo or misspell can trick you and put your financial information at high risk.
2. Confirm All Details
When discussing any important transaction, verify all the details associated with the transfer. Don’t be afraid to ask questions as your personal information is being shared. A great way to confirm that your point of contact is reliable is to directly ask them to confirm the account number and name. Based on the documents they’ve been given, your lender should have no hesitation in providing this information to verify they are not fraudulent.
3. Contact Your Escrow Company
As a rule of thumb, it’s best to get a verbal verification from your escrow company whenever you receive a wire transfer request and to never click on any attachments or links provided within a wire transfer request email (what is an escrow company for?). When you call your escrow company, do not use any phone numbers provided in the email or attachment in question. Instead, reference the phone number on the escrow documents that you already have or use a phone number that you know has worked in the past. Once you receive verbal confirmation that your wire transfer request is from a valid source with valid transfer details, complete the transfer, then notify the escrow company so that they can be on the lookout for it.
Phishing and Wire Transfer Red Flags
The most common instance of wire fraud is done through phishing, which is when a criminal impersonates a client, employee, or business to submit phony wire transfer requests. These fraudulent requests can result in the loss of hundreds of thousands of dollars and once completed, wire transfers can be difficult or even impossible to get back.
This is a persistent issue plaguing the financial industry, so it is important to know how to spot the red flags that suggest mortgage fraud.
Since the most common method of wire fraud is through impersonation, one of the best ways to avoid becoming a victim of wire fraud is to heavily scrutinize any wire transfer requests that you receive. Consider if anything is out of the ordinary about any wire transfer requests that you receive by asking yourself these questions on some wire transfer red flags:
- Is the email address valid? Look for things like tiny changes in spelling (for example, using “rvvmloans” instead of “rwmloans”), different domain name such as .com and .net, or the use of special characters.
- Is email your usual method of contact with the source in question?
- Does the email suggest that the transfer is urgent or time-sensitive?
- Was it sent at a reasonable time of day?
- Is the writing style in the email consistent with how the contact writes or speaks?
- Does the email claim unavailability for verbal confirmations or changes to the original instructions?
- Does the email contain poor spelling and grammar?
- Does the email make odd requests such as keeping the transaction secret?
- Is there anything at all unusual about this email?
Wire transfers can involve thousands upon thousands of dollars, so while intense scrutiny of these requests can seem tedious, it’s better to be safe than sorry with so much at stake.
Awareness and caution are your most effective tools against fraudulent wire transfer requests. Knowing what to look for and going through the process in a measured and thoughtful manner will stop the majority of mortgage fraud schemes in their tracks. While this guide is a good start, fraud is always adapting to new technology and security systems, which means that no two instances of wire fraud are identical. Because of this, here are some additional habits that can not only protect you from becoming a victim of wire fraud, but from other cyber threats like identity theft.
- Never send financial information via email.
- Avoid clicking on links or attachments sent to you via email as these can contain viruses.
- Change your usernames and/or passwords often.
- Install antivirus, firewalls, and malware protection software onto your computer.
- Regularly delete your emails since a large number of emails could be used by hackers to impersonate you.
- Don’t share detailed information about your purchase on social media.
- Report all fraudulent activity to the FBI.
Among other common mortgage mistakes, these crimes can be detrimental to your financial situation, possibly becoming your biggest roadblock in buying your dream home. Mortgage fraud, wire fraud and cyber threats are serious, persistent issues and this guide is only the tip of the iceberg. However, being aware is the first step in keeping fraudsters out of your home buying experience. If you have any questions about cybersecurity as it relates to mortgages, give us a call today and we can assist you as needed.
Financing details are for educational purposes only. Rates, program terms, fees, and conditions referenced are subject to change without notice. Not all products are available in all states for all amounts. All mortgage applications are subject to underwriting guidelines and approval. This is not an offer of credit or a commitment to lend. Residential Wholesale Mortgage, Inc. dba RWM Home Loans is an equal housing lender licensed by the CA Department of Real Estate #01174642 and CA Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act. NMLS# 79445