Beware of this real estate fraud

Written by Posted On Wednesday, 09 May 2018 08:34

In the last few years technology and scammers have really changed the way we do real estate here in Metro Detroit.  You have to be aware of the current scams and the ways criminals are trying to seperate you from your money.  So here are my tips on one of the ways that has to do with title companies and wiring money.  Whether you are a buyer or seller you have to be careful.  Whether you are selling a lake house for sale in Oakland County MI or a home in Wayne County I want you knowledgeable about the latest scams so you do not lose money.

Please remember that wire fraud is still rampant in the real estate industry. One of our more recent cases, the fraudsters hacked the buyer’s email account and sent the forged wire instructions first, before legitimate wire instructions were sent to the buyer.  Because they were first to arrive, the buyer did not independently verify the forged wire instructions.  The buyer followed the instructions and sent the money to the fraudsters bank instead of the legitimate title company.   Luckily we were able to retrieve the money, but that won't always be the case. 

A friend of mine that owns a title company told me about another case.  The fraudsters hacked the seller's agent email and sent the title company an email and wire instructions to the fraudsters bank.  The title company wired the sales proceeds to the fraudsters bank.  Luckily the fraudsters only took $10,000 out of the account before it was traced and put on hold.  The title companies fought over who was paying back the $10,000.  The seller finally got the $10,000 and all the other money that was wired to the wrong account. 

We can't control all bad decisions by our clients, but we can do our best to continually monitor and remind anyone we are working with about the dangers of wire fraud.  Please remember the following in any wire opportunity:

  • Never provide any wire instructions to a buyer or seller via e-mail.  The title company should provide that information via an encrypted (password protected) e-mail,via voice or in person.  SomeLenders also providewireinstructionsthrough a portal to whichthe borrowerhas access.For instance, the title company should provide the wire instructions to their buyerthrough the title companies portal.
  • When in doubt, use aCashier’scheck over wired funds if the amount if not over the limit.  There is still check fraud risk as well as the issue of managing back to back closings, but most title companies should be able to handle those issues. 
  • Make sure that your seller or buyer (regardless of if you represent the buyer or as a subagent) receives a CUSTOMER FRAUD WARNING AND ACKNOWLEDGEMENT form.  Sometimes buyers and sellers hear you but do not understand the full implications.  Sometimes the buyer or seller see it in black and white they will remember better.  If you have both sides to a transaction, both parties need to sign the form regardless of which side you represent.  Also, you can't assume other brokers are following the issues diligently so we suggest you send the form to co-op agents along with the final PA just to be sure (no need for a signature). Wire fraud hurts everyone in a transaction, not just the buyer.
  • Buyers and Seller's need to confirm every wire instruction they receive via independent phone call (not from the e-mail). Criminals now are sending fraudulent instructions (either under the title company or agent's e-mail) well in advance of the closing date to be the first instructions the buyer sees and the early the buyer sends the wire, the more likely the money will be gone before it is noticed at the closing day. 
  • A reminder/check-in call to your buyer a week before closing and/or an e-mail attaching the fraud warning notice is a great way to remind them of the dangers.

BOTTOM LINE IS : If you are wiring to a title company or receiving money wired from a title company the only way you should communicate is either in person or by phone.  The wiring instructions should not be sent via email. 

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