Preventing Internet Fraud

Buying a house and financing the purchase is an intensive process and occurs at a rapid pace, in no small part, thanks to technology like email, wire services and online document sharing.  But what if the same technology that is supposed to help you, hurts you? This is the case for many victims of internet fraud. Criminals pretending to be trusted advisors can trick homebuyers into taking actions or revealing information that risks their financial security.

According to the FBI, email account compromise, the kind of fraud in which a person gets fooled by a fraudulent email posing as legitimate, costs victims adjusted losses of over $1.2 billion in 2018.

One particularly malicious scam targets homebuyers and involves wire transfer instructions. In many home closing transactions, a buyer wires funds from the loan lender to an account at the title company. The scam occurs when a fraudster sends an email, impersonating one of the participants in the deal, and tells the homebuyer to wire the funds to an account that actually belongs to the criminal. The homebuyer orders the wire in accordance with those directions, only to find at closing that the money isn’t there – it’s been wired to the illegitimate account.

The financial consequences for the homebuyer can be severe, and at minimum, a fraud like this may derail the closing.

Unfortunately, this type of scam is gaining in prominence. In October 2017, the Chicago Tribune quoted FBI data reporting, that, $969 million was “diverted or attempted to be diverted” from real estate transactions and wired to accounts under criminal control in 2017. In stark contrast, only $19 million in wire transfer frauds affected homebuyers in fiscal year 2016.

So how can you avoid this type of internet fraud, and what should you do if you fall victim to mortgage wire fraud?

Tips to Avoid Internet Fraud

1. Pay attention to detail – Fraudulent emails often have tell-tale signs that give them away as fake or “spoofs.” Look for things like extra hyphens or plurals in email addresses like john@mottos-mortgage.com. Hover over email hyperlinks before clicking them; if the URL is cryptic and long, reach out to the contact directly to verify the validity of the link.
2. Know your partners – Work with your loan originator to understand who will be contacting you, when, and for what purposes. If you get an unexpected request for information, contact your LO to verify the identity of the requester.
3. Never send personal information via email – Even with encryption and other data security measures, email remains vulnerable. Never provide personal or financial information or documents through email; always rely on secure portals online—either the Motto borrower portal or a wholesale lender’s similar website. Scammers will use information found in compromised emails to imitate a mortgage service provider and attempt to steal your wired closing funds.

What to Do When You Suspect Fraud Has Occurred

Mortgage wire fraud can be extremely difficult to track because it is often international, and the perpetrators usually camouflage their identities. However, victims can fight back by doing the following:

1. Never click links found in suspicious emails; these can download malicious identity theft programs to your device and expand the scope of the attack.
2. Notify your loan originator of the fraud immediately so they can ensure the attack does not affect other borrowers, too.
3. Call the local field office of the FBI.  
4. Initiate a complaint within 72 hours of when the fraud occurred via the FBI Internet Crime Complaint Center.

If your LO, an IT professional, or anyone wants to investigate a fraudulent email, don’t forward it. Instead, start a new message and add the fraudulent message as an attachment. This will protect against the spread of any sophisticated malware embedded in the email.

Unfortunately, the fight against internet fraud is never-ending. If you receive an email requesting personal or financial information, or detailing how to complete a wire transfer, please call to verify its legitimacy. It is imperative all parties in the homebuying process do their part to protect against fraud.

For more information about preventing mortgage fraud, contact your local Motto Mortgage office and review the Fannie Mae anti-fraud guide and the FBI’s electronic crime site.