In the past, instances of fraud mainly centered around the consumer trying to get away with providing misrepresented information to get approved for their loan. Some instances dealt with unscrupulous parties creating bogus loans based on fictitious information to reap some ill-gotten gains.
That’s small potatoes compared to what the industry now faces in the digital world of cyber transactions. Criminals are going to great lengths to hack into systems to gain more and more consumer and business information. Unfortunately, it’s all out there and easy to access.
They are not using this information to obtain fraudulent loans, but to intercept money wired in connection with loan transactions. Each case tends to involve a combination of email hacking, identity fraud, and wire fraud.
First, the crooks hack into sites to steal sensitive data of an impending real estate sales and mortgage transactions. Then, they assume the identity of one or more of the parties involved.
With that, they convince other parties to change certain wiring instructions, having money intended for down payments or settlements sent to the hacker’s account. Easy pickings, especially in a digital transaction.
They also cover their bases. Call and verify may no longer be a defense. Some of these guys or gals are now using phone porting technologies to camouflage their phone numbers to resemble those of authorized parties to the transaction.
This gives new meaning to the phrase “Trust but Verify”. But how do you verify?
- Educate your employees, borrowers, and closing agents of such scams
- Advise borrowers to confirm any such requests directly with their Realtor AND loan originator. They should have a better relationship with these parties
- Do the same with closing agents
- Establish wire information up front with closing agents. Don’t wait until just before closing
- Before you wire money, call the recipient to validate their wire instructions
- When in doubt, don’t send the money.
Worst case, funds can be wired at closing when everyone is there, as long as you can verify the recipient as the party closing the loan. One way to verify is to provide the closing agent with a confirmation number within the closing package.
You should also make sure that any party with which you do business is taking the proper precautions to protect the information and money you provide. What are they doing to identify and prevent fraud, of any sort?
Make fraud detection a top priority. Get everyone involved. “See something, say something” needs to be your fraud detection motto to deter criminals make it as difficult as possible. Like most, they’ll look for the easiest targets. Don’t be one.