Cyber crime steals home closings
Four #WiseChoices blow the lid off of hackers stealing homebuyers’ closing transactions.
Kevin Snider hasn’t seen anything like it in his 20-plus years of practicing law.
“We currently represent two homebuyers, in two different matters, who have been the victims of cyber fraud,” said Snider, founder of Snider & Horner PLLC, your #WiseChoice for attorneys. In both matters, Snider said hackers intercepted the homebuyers’ down payments when their closing attorneys or realtors insisted on using unsecured, unencrypted email addresses to transfer them.
“Had encrypted email and attachments been used, our clients would most certainly not have lost thousands of dollars,” Snider said. “When you send an email, it doesn’t go directly from your computer to someone else’s. It goes from your computer to a mail server and then goes all over the place before it is delivered. Parts of it can be left anywhere or can be intercepted, which can include addresses, Social Security numbers and bank account information.”
Real estate writer Kenneth R. Harney broke down the home closing hack in this Miami Herald story. “The scam generally works like this: hackers find an opening into a title company’s or realty agent’s email account, track upcoming home purchases scheduled for settlements — the pricier the better — then assume the identity of the title agency person handling the transaction,” wrote Harney.
“The scammers attempt to steal the homebuyer’s closing funds — for example, their down payment and closing costs — by sending the homebuyer an email posing as the homebuyer’s real estate agent or settlement agent,” said Davida Farrar of the federal Consumer Financial Protection Bureau (CFPB). “The email falsely claims there has been a last-minute change in the closing process. It instructs the homebuyer to wire…the closing funds to an account that the scammers control.”
Crye-Leike buyer’s agent Lisa Cannon, your #WiseChoice for a realtor, said legitimate real estate and settlement agencies will never send wiring instructions via email, fax, text or social media. “I caution everyone to independently verify the authenticity of wiring instructions prior to transferring money to anyone, whether it be a title company, bank, closing attorney, etc,” Cannon said. “Call the business, walk in the business. Don’t just trust an email sent out or a phone call made to you. Verify, verify, verify!”
“Make a personal request to your real estate agent, lender and closing attorney to only contact you by telephone or request to meet you in person at their office,” said Kevin Helms, owner and lead investigator of ActiveTracks LLC, your #WiseChoice for background screening solutions. “This should be standard if there have been any changes regarding wiring funds or other cash transfers.”
Debbie Hylander, owner and head accountant of Hylander CPA Firm, PLLC — your #WiseChoice for tax preparation, planning and business consulting — said the electronic transfer of sensitive financial documents should only be an option if the real estate agency or title company first acquires the homebuyer’s consent, then employs encrypted, secured transmission methods. “We never ask clients to email us any sensitive information,” Hylander said. “Email is not secure, period! We do, however, offer an encrypted, secure app and web portal for our clients to securely send and receive sensitive tax information, but only at their request.”
The CFPB offered these tips to avoid the home closing scam:
- Discuss the closing process and money transfer protocols with your real estate agent or settlement agent.
- If you receive an email requesting that you send money in connection with closing, even if it is from a familiar source, STOP. Call your real estate or settlement agent to discuss. Do not use phone numbers or links in the email.
- Don’t email financial information. Email is not a secure way to send financial information.
- Be cautious about opening attachments and downloading files from emails, regardless of who sent them. These files can contain malware that can weaken your computer’s security.
- Before sending any wire transfer, ask your bank for help identifying any red flags in the wiring instructions.
- Confirm receipt of the wire transfer by your real estate or settlement agent a few hours after the wire was transmitted. If you or another entity involved in the closing suspect a problem, report it to law enforcement and your bank as soon as possible to increase your likelihood of recovering the money.
Snider said real estate agencies or title companies who do not use encrypted electronic communication or who will not accommodate their clients in person should be held accountable. “If encryption is not used for these types of sensitive transactions and communications, it is my opinion that it is below the standard of care for someone in that industry or profession,” he said.
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