The FBI is warning of a significant increase in the number of prospective homebuyers being fleeced out of their savings. A report notes a nearly 2,200% increase in monetary loss from 2015 to 2017. More recent data shows that in 2018, consumers cumulatively lost an eye-popping $12 billion to mortgage scams. The average loss was $162 thousand.
How Real Estate Wiring Scams Work
Sophisticated scammers monitor a target’s correspondences and wait until a home purchase is about to close. The scammer then sends the buyer payment instructions for the buyer to transfer the money to a bank account that the scammers control.
Once they have the funds, the scammers send the money to other accounts (some of these accounts are overseas), and getting the money back becomes increasingly difficult (if not impossible). The FBI has stated that once the funds have been sent, it is difficult to prosecute the scammers for a crime.
In their quest for potential targets, scammers commonly target law firms, agents, buyers, and sellers. If they can gain access to one of the email addresses that are involved in a real estate deal, then they can monitor all correspondences and send their illicit payment requests at precisely the right time.
How to Stay Safe
To protect yourself against fraud, the FBI recommends that before you send any payments, you verify the authenticity of the request. Make a call to the appropriate party to confirm the payment request; you can even establish a code phrase ahead of time. Also, be wary of anyone asking for a last-minute change to the payment method (for instance, an email requesting a wire transfer instead of a check).
Due diligence can go a long way toward preventing fraud. If you are interested in optimum security, then you might want to check out Propy’s Transaction Management Platform. Here, all of the parties that are involved in the transaction work together in a single application.
Propy’s unified environment ensures the authenticity of all communications and makes it nearly impossible for scammers to disrupt the process. Given that the average mortgage scam claims more than $100 thousand, it pays to be careful.