Searching for a new home, can be as exciting as it is stressful, tedious and time-consuming. It will likely be one of your most memorable life moments, especially for first-time buyers. So when you do find that perfect home for you, your bid is accepted and the inspection comes back great, you and your family celebrate and start down the long check-list of things to do prior to your move.
As that closing date approaches, unfortunately, the risk of being a victim of a phishing scam does as well. The ultimate cost could be the loss of your entire life savings and there is usually not an insurance policy that will recover your money if this happens to you.
The FBI has reported that scammers are increasingly taking advantage of homebuyers with very complex, sophisticated schemes with reports of mortgage fraud rising over 1,100 percent each year. There was an estimated loss of nearly $1 billion in real estate transaction costs in 2017 alone.
How would mortgage fraud happen to you? Mortgage fraud, a sub-category of financial institution fraud (FIF), typically starts with a phishing email that appears to be coming from a trusted professional involved in your property purchase. The email claims to be notifying you of changes to your wiring instructions or that they had made a mistake and previously discussed the wrong wiring instructions with you. Wire fraud is so prevalent that many attorneys, lenders and realtors are starting to include a warning about it in their emails. “We do not accept or request wiring instructions or changes to wiring instructions via email. Always call to verify.” But, be wary that even phone conversations may be fraudulent.
What can you do to prevent mortgage fraud from happening to you? Consult the Consumer Financial Protection Bureau’s Mortgage Closing Checklist. Identity two trusted individuals involved in the closing process and have multiple ways for you to contact them. Real estate professionals suggest that you create a code phrase that is only known to the trusted parties involved in the transaction in case there is a need to confirm their identities in the future. Be mindful that email is never a secure way to send financial information or closing details.
What if mortgage fraud happens to you? Try to ask for a wire recall with your financial institution. Being swift in reporting the crime can greatly increase the likelihood of recovering your funds. Report the fraud to your identity theft resolution provider. Lastly, file a complaint with the FBI.
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