You saved for years. You learned what “PMI,” “front-end ratio” and “5/1 ARM” mean. You planned for three weeks in advance to make sure all your friends could help you move, and you pre-ordered 12 pizzas and three cases of beer to thank your friends when the moving is done. You did everything your realtor asked you to do, you wired your down payment according to the instructions you got by email, and when you get to the closing, you find that the title agency doesn’t have your money. You aren’t closing today. You probably aren’t closing on this house at all. You might not even be buying a house at all, because your money has been stolen.
This story is becoming all too common in today’s real estate industry. There are sophisticated computer criminals who are devising clever ways to wedge their way into email communications between homebuyers and real estate agents, attorneys, and title agents. The basic scam goes like this – the thief targets a title agency or a realtor, and creates an email that looks like that person’s outgoing email – it has the same signature block, uses the same name, and may even come from a similar domain (for example abctitle.com might be changed to aabctitle.com – enough difference for the criminals to own the domain, but not so different that you’ll notice right away). Then, they send you a request for you to send your closing funds by wire transfer to a bank account. You send them, because you want to close on time, and as soon as the money hits their account, it is gone – transferred again so it can’t be traced, and it’s likely gone for good.
Luckily for us and our clients, we have not yet had to try and chase down funds that were stolen this way. We can, however, give you some tips to ensure that your money ends up where it is supposed to be:
1. Insist that your title agency, realtor, lawyer or any other professional sending you wiring instructions use a secure delivery method for those instructions. Here at Lardiere McNair and at our title agency, Capital City Title Agency, we use a program called protected trust that uses either a prearranged password or a security code delivered by text message. Other companies may use similar software, or may use a secure portal on their website, or any of a few different secure delivery systems. When in doubt, insist on hand delivery – you can go to their office to retrieve their wiring instructions.
2. Once you receive wiring instructions, call the title agency to verify them. Do NOT use the phone number in the message carrying the wiring instructions – get the number from your realtor or from other documentation you’ve received about the closing.
3. Never take wiring instructions from someone who called you on the phone. There are computer programs that can “spoof” the caller ID number, so you can’t be sure who you’re getting the phone call from.
4. IF YOU FEEL UNCOMFORTABLE, DON’T SEND THE MONEY. Title agencies are required to take your payment by wire in certain circumstances, because it is completely irrevocable – you can’t cancel it like you would an ACH or a check, and you can’t get the money back without the recipient agreeing to send it back. If you go to the closing and tell the settlement agent that you weren’t sure you had the right wiring instructions, they should be able to give you wiring instructions by hand that you can take to the bank and wire the funds.
If you have any questions about wire fraud, or if you’re buying or selling a house and you have questions you’d like answered, give us a call and come chat with us.
Ben Worsowicz is an Associate at Lardiere McNair, LLC. To read more about our firm, please visit www.lmcounsel.com.
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