What Is Mortgage Wire Fraud?

Mortgage wire fraud is a type of cybercrime where fraudsters trick homebuyers into sending wire transfers for closing costs to fraudulent bank accounts. This can result in the loss of tens of thousands of dollars, turning the dream of homeownership into a nightmare. The National Association of Realtors identifies mortgage wire fraud as one of the most common cybercrimes in real estate, leading to millions of dollars in financial losses each year.

How Does Mortgage Wire Fraud Work?

During the closing process of a home purchase or mortgage refinancing, homebuyers are typically instructed to send closing costs via wire transfer to the title company handling the transaction. These costs can include mortgage application fees, escrow fees, appraisal fees, legal fees, and courier fees, amounting to 2% to 5% of the loan amount.

Fraudsters often use phishing emails containing malware to gain access to email accounts of title company employees, real estate agents, or homebuyers. They gather information about pending real estate deals and then send fraudulent emails posing as real estate professionals, instructing homebuyers to send money to a different bank account. Once the money is transferred, it is quickly withdrawn and often moved to another account, making it difficult to recover.

How to Protect Yourself from Mortgage Wire Fraud

Follow these steps to safeguard yourself from mortgage wire fraud:

Be Careful with Email Attachments

Be cautious about opening attachments, clicking on links, or downloading files from emails, regardless of the sender. These could contain malware that gives hackers access to sensitive information.

Update Your Technology

Ensure your security software, web browsers, and operating system are up-to-date to prevent hacking attempts.

Nail Down Contact Information

Have phone numbers and other contact information ready to confirm wire transfers. If you receive an email about a change in contact information, call the original number to verify.

Set Up Special Codes

Use a secret word or phrase known only to you and key people involved in the transaction. Do not mention this code in any emails.

Be Suspicious of Last-Minute Changes

If you receive an email about last-minute changes to wire transfer instructions, call a verified phone number to confirm the details before proceeding.

Call Before Initiating a Wire Transfer

Before sending money, call the title company or lender to verify the account details. Ask your bank to double-check the recipient’s account information.

Verify the Wire Transfer

After sending the money, call the appropriate parties to ensure they received the correct amount.

What to Do if You’re a Victim of Mortgage Wire Fraud

If you suspect you are a victim of mortgage wire fraud, take these steps immediately:

• Contact your financial institution or wire transfer company to request a reversal and refund of the wire transfer.
• Reach out to your real estate agent, title company, and others involved in the transaction.
• File a complaint with the FBI at www.IC3.gov.

The Bottom Line

Mortgage transactions involve significant amounts of money, making it crucial to take steps to prevent mortgage wire fraud. If you become a victim, act quickly to increase the chances of recovering your funds. For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. Our team is here to help you navigate the mortgage process safely and securely.