In light of the hacking and cyber-heists we saw in 2017, you have probably taken some precautions with your own data. Password changes, updated security measures, keeping a closer eye on your credit reports. But if you're buying a home and heading to the final closing, you may be more vulnerable than you think to the fastest-growing form of real estate cybercrime in the United States, thefts of home purchase money sent by wire to complete real estate transactions.
According to data released by the FBI, in fiscal year 2017 nearly $1 billion ($969 million) was diverted or attempted to be diverted from real estate purchase transactions, and wired to criminally controlled accounts. That figure has skyrocketed from fiscal 2016, when the FBI reports ‘just’ $19 million in wire transfer frauds affecting homebuyers.
In January of 2017, a Denver couple signed a contract to buy a new house. They had sold their previous home and planned to use the proceeds as a down payment. Somewhere on the way to the scheduled closing in April, criminal hackers gained access to the email system of one of the involved companies. On the agreed date, the couple received genuine-looking email instructions on wiring the down payment cash in preparation for the settlement, for the exact amount that had been settled upon. But the instructions were falsified, the account number did not belong to the title company, and the money disappeared. Nothing has been recovered.
A Washington, D.C., couple lost $1.57 million last year when their wire transfer of settlement funds was hijacked after cyber-thieves reportedly penetrated an escrow company’s email system and steered the money to their own account.
In both cases, the buyers received an email which gave them instructions with a ring of truth, but that contained inaccurate information. The buyers might have been alerted by some red flags, if they had known what to look for.
These are three easy steps buyers can take to ensure the safety of their closing funds.
- Pay attention to how your wire instructions are sent. It is best to only accept instructions that are secure/encrypted.
- Before you wire funds to an individual or company, call to verify the wire instructions independently with your title company or closing agent.
- Be very wary of changes. Wire instructions very rarely change, so if you receive an email stating they have, be very diligent in confirming the validity of it independently with your agent or title company.
At Setco, we know the bottom line is to have one consistent way throughout our organization to give wiring instructions. We make sure all parties involved are aware of the process. The best defense against this type of scam is having multiple checkpoints with your title company to ensure everything you are being instructed to do is legit. For that reason, we keep our clients in the know and aware of the risks, and encourage everyone to verify information by phone at each juncture. Please click below to contact our local title professionals with any questions about the security of your real estate transaction, and learn more about how we can help you have a safe & secure closing process.