Closing on a home is both exciting and stressful. Also, most people do not have much experience with closing real estate deals. Fraudsters exploit these factors to scam unsuspecting homebuyers out of closing costs. This type of wire fraud is more common than you may think. It costs buyers in the United States millions of dollars every year. But how does this type of wire fraud work? Read on to find out!
Mortgage wire fraud involves tricking a buyer into sending closing costs to a fraudulent account. The scammer will pretend to be the transaction’s escrow officer or title representative. They will send the buyer an email, text, or even call. During the communication, they will invent some reason to send the closing costs to a bank account they own. Once the transaction is complete, it can be near impossible to recover the money.
The particulars of closing fraud can vary from one scam to the next. However, there are common factors that run through most of these scams. We will cover the basics of mortgage closing fraud in this section.
The victims are always in the process of buying a house. When they are ready to close, they will receive an email or other communication about paying the closing costs. The message will seem to be from the title company or real estate agent, although it is rare to look like it comes from the real estate agent.
Maybe the message says that you sent your funds to the wrong account number. It could be a claim that they can’t accept a check and need a wire transfer instead. They might also add urgency by claiming you could lose the house if you don’t act fast.
These scams work because they do a good job impersonating a person you can trust. The scammer may have been able to infiltrate the agent’s email server. From there, they look for buyers who are ready to close. They then gather information about the buyer and the sale to make the message seem legitimate. The scammer then creates an email address that looks like the one your real estate agent or title company uses. Some scammers even use software that can make it look like they are calling or texting from the agent’s phone.
Once the buyer sends the money, the scam is complete. The instructions often have the buyer send the money to an untraceable offshore account. It is usually too late to do anything when the buyer recognizes the fraudulent behavior.
This type of scam can be devastating for homebuyers. With that said, there are steps you can take to protect yourself.
The best defense for this scam is always to call and confirm that the message or call you received was legitimate. Call your title company or real estate agent before sending any money anywhere. They will confirm your wiring instructions are not fake. Always confirm any message asking for money in a real estate transaction. This way, you’ll avoid losing thousands of dollars to scammers.
Stay tuned for our next post, which will elaborate on how to avoid wire fraud.
Do you need to close your escrow on time and professionally in the Knoxville area? We’d love to help you! Please click here for our contact page, and we’ll reach out to you promptly.
Thanks for visiting!