Home Mortgage Alliance Corporation (HMAC)

Wire and brimstone: Nightmare scams in the digital age

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Published Date 9/20/2024

All that money for your dream home just left your account. Soon you’ll hear the words “on record,” and the house will be yours — or yours and the bank’s. But suddenly you find your mortgage broker never received the payment, and your money has disappeared. What on earth just happened?

The joy of purchasing your dream home can quickly turn into a nightmare if you fall victim to mortgage wire fraud. This horrifying scenario became a reality for tech executive Rana Robillard, as reported by Realtor.com's Julie Gerstein. Robillard was in the process of buying a house in Orinda, CA, when she received what appeared to be an email from her broker with wire transfer instructions for her down payment. Following these instructions, she wired $398,359.58 to a J.P. Morgan account. However, she soon realized that the email was not from her broker, but from a scammer. In an instant, her life savings disappeared, along with her chance to purchase the home.

Gerstein notes that Robillard's case is just one example of the growing issue of mortgage wire fraud. FBI data shows that consumers lost $445.1 million to email-related real estate scams in 2022, a staggering increase from $9 million in 2015.

While Robillard eventually received a refund from her banks after five months, many victims aren't as fortunate. It's crucial for homebuyers to understand how to protect themselves from such scams.

Secure Cyber's CEO Shawn Waldman explains that mortgage wire fraud has become more prevalent in recent years due to technological advancements and the real estate industry's shift towards online transactions. These scams often originate at title companies. Waldman states, "Somehow, an employee at the title company gets their email password compromised, allowing the threat actor to monitor emails going back and forth."

This access, according to Gerstein, enables scammers to mimic legitimate conversations and assess the potential financial gain from the scam.

Eder Ribeiro, director of global incident response at TransUnion, elaborates: "Upon gaining email access, the threat actor is able to read the victim's emails to better understand the environment for a successful scheme. They are able to add rules and use native tools to give them long-term access to the email account without having to actively monitor it. Ultimately, the threat actor is able to hijack client conversations at the right moment, with the goal of obtaining a fraudulent funds transfer."

Gerstein explains how the scammer then uses the broker's real email address to send a fraudulent email with new wiring instructions, diverting the funds to their own accounts. She points out that wire transfers are particularly attractive to scammers due to their speed, with money potentially disappearing through multiple accounts within minutes. She adds, "These types of scams, sometimes referred to as spear phishing attacks, often fly under the radar because, unlike the usual email phishing attacks, which attempt to scam thousands of people at once, these attacks usually target one person at a time."

Ribeiro emphasizes the sophistication of these scams: "Cybercriminals have shown they are willing to invest a lot of time in creating complicated, realistic schemes when there's the potential for a large payday."

Scammers may use various techniques, such as initial phone contact followed by email instructions. They're also employing generative AI to create more convincing emails, making detection more challenging.

To protect yourself from real estate fraud, Gerstein advises securing your personal information and considering identity theft protection services. It's crucial to confirm payment instructions directly with your loan officer or agent and verify wire instructions through a known phone number before sending money.

Darius Kingsley, head of consumer banking practices at Chase, cautions: "Wire transfers can be a convenient way to send and receive money, but keep in mind they usually cannot be reversed. Be cautious and always ask if there are other ways to pay if you are requested to send a wire."

Gerstein quotes Lisa Gaffikin, a home loan specialist with Churchill Mortgage, who recommends that homebuyers call their assigned escrow officer to verify wire instructions against the document in their closing loan package. She advises, "Before they order the wire from their outgoing bank, they should have the banker confirm the receiving wire location and account owner to make sure the recipient matches the title company's bank account. Do not trust wire instructions sent via email solely."

Waldman suggests discussing security measures with your brokerage company to prevent wire interceptions. He emphasizes, "Never accept someone trying to change the details of the transaction at the last second. This should be the biggest red flag."

Realtor, TBWS

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