Mortgage Wire Fraud: Not Just a Buyer Risk
Articles by: Richey May, Dec 11, 2020
You haven’t been in the mortgage business long if you haven’t heard of the risks around wire fraud. You’ve seen it before: a hacker or con artist finds a way to insert themselves into the closing process, spoofing someone from the mortgage company or title company, and reroutes a buyer’s closing funds to a fraudulent bank account, often getting away with the money before anyone knows what has happened. And because the money is cash on hand, it’s difficult to recover.
The scenario has played out again and again in recent years – and now, it seems to be happening more often.
An increasing risk
Even before COVID-19, mortgage fraud was on the rise. Now, especially during the pandemic, as people are doing almost everything digitally rather than in person, in combination with the increased volume, these fraud incidents have been increasing even more. But knowing that it happens only helps so much.
Experienced, attackers break into your employees’ emails, accessing transaction amounts, closing dates, and other valuable information about your customer and the transaction. They know how to impersonate your company, and even your individual representatives, spoofing your email addresses and phone numbers and using the information they’ve lifted to trick the buyers into wiring money to them instead of to you. They even create call-back numbers – so if the borrower or title company wants to call by phone to verify the authenticity of the communication, the call goes through to the hacker instead of the company.
The attacks are not just getting more aggressive – they’re getting more sophisticated.
Nevertheless, numerous organizations minimize or haven’t taken precautions around this increasing risk. Perhaps the title company expects the lender to be on top of it. Or maybe the lender is convinced the title company has the right security measures in place. Sometimes, when things are busy, certain security steps might be bypassed by employees unaware of the heightened risks. And of course, there’s the poor untrained buyer, who has never done this before and may have no idea what to watch for. In the end, everyone is on the bad end of this deal – excepting the thief.
And that brings up an important point:
While the homebuyer is the most common target for mortgage wire fraud, anyone involved in wiring money during the mortgage process can become a victim.
So who is the party most responsible for diligent protection of these vulnerable funds? While the answer would seem to be that everyone should share equally in establishing protection against wire fraud, the reality is that it’s in the mortgage lender’s best interest to step up and put robust security measures and processes in place. This is because the buyer usually doesn’t have the experience or training to know what to watch for, and the lender can’t necessarily count on the title company to have adequate protections in place.
Establishing the right protections during uncertain times
Of course, it can be a challenge to know what methods and tools exist to help protect against this threat. Trying to seek them out on your own can take precious time during which you and your customers remain vulnerable. In addition, lack of awareness of all the angles to cover potentially leaves gaps in protections that may render your work meaningless.
To combat these challenges, our cybersecurity experts know what is needed to establish true protections against mortgage wire fraud – especially around protecting your clients’ information. Protecting your communications with your customers is of the utmost importance in stopping wire fraud in its tracks. In addition, we can help you establish policies, procedures, and practices to help your employees recognize and take the correct steps to prevent fraud and recommend software systems to increase protection of your assets.
Accessing our team’s knowledge of software, communications practices, and policies can help your company quickly establish the right systems to put in place now, protecting you and everyone involved in mortgage closing transactions. This enables all parties to emerge safely and securely from the closing process, getting your customers into their new properties and leaving the fraudsters out in the cold.