Wire Fraud

Carly Andreatos was just days away from buying her first house when an email came from her attorney’s office.  In it, she found directions for wiring her down payment and closing costs, a total of $22,890. Not wanting to delay closing, she quickly wired the money, literally all her life savings, as directed.  However, her attorney never received the funds. The email was sent by a scammer in an all-too-common fraud scheme targeting homebuyers.  As we continue REALTOR®  safety month, understand not all danger is a chain-saw wielding masked mutant.  Danger can come in many different forms. This week’s danger can be a simple, silent email. Sadly, stories like Andreatos’ aren’t uncommon. A survey of title agents, those charged with transferring a home’s title and managing the closing and escrow process, shows that a third of all 2020 real estate transactions included some sort of wire fraud attempt.  The scam works like this: A scammer gains access to an email account involved in the home sale:  a real estate agent, a lender, a title attorney, or even the buyer — usually through some sort of phishing attempt. They then monitor emails, watch the transaction progress, and insert themselves at just the right time. That’s when they ask the buyer, using a very legitimate-looking email, to wire funds to an alternate bank account. The pandemic,  not to mention the real estate boom it spurred,  created prime conditions for wire fraud scams to take flight last year. For one, there were simply more transactions to target. The National Association of Realtors® shows that 5.64 million existing homes were sold in 2020, the most since 2006. Moreover, many of these transactions were completed online due to pandemic safety measures. This made it easier for scammers to insert themselves and, in many cases, caused buyers to let their guards down a bit. You should  talk to your lender and title company about what you’ll owe, when you’ll owe it and how you’ll be asked to pay — so you’ll know when to be suspicious. “Buyers should never trust wire instructions or phone numbers in an email.And don’t forget: You can always ask to pay via cashier’s check instead of wiring your funds. While this will require actually going into the office, it ensures the money gets in the right hands.Only 29% of victims see their funds fully recovered. In 40% of cases, 10% or less is recovered. If you think you’ve fallen victim, call your bank and have them recall the wire transfer immediately.  As I’ve said many times, the home buying process is a complex transaction with many moving parts. Scammers feed off the complexity and unknowns to unsuspecting buyers. Know that REALTORS® do NOT get involved with wire transfers and will not send you an email regarding wiring instructions. Those communications may originate from the lenders or attorneys. There again… another glaring example of the importance of working with local  real estate professionals.

Until next week, love where you live.  And if you don’t… contact your local REALTOR®.

Brian Haufe, 2022 MBOR President