You’ve found the perfect home, won the bid, completed the inspection, secured your financing, and now it’s time to close. This time is full of excitement and anticipation as you near the end of your homebuying journey.
During this phase, there are a lot of moving parts, including money changing hands, multiple parties involved, and numerous documents to sign.
Sadly, scammers prey on victims when their guard may be down. Scammers use this often stress-filled time to their advantage.
Mortgage Wire Fraud
One of the common mortgage scams used by thieves is closing cost wire transfer fraud. Scammers target homebuyers during the mortgage closing process and get them to divert the funds to an account controlled by the scammer (instead of the closing company’s). This can happen both to those buying and refinancing a home.
Scammers often use email as a means to gain access to the personal information needed to conduct the scam. The Federal Bureau of Investigation (FBI) reports this type of email compromise as an extremely damaging online crime. Scammers typically identify a target, groom victims through phishing emails or phone calls, collect sensitive information, and finally, convince the victims to send them their wired money.
Phishing is a type of cybercrime in which scammers use email, phone, or text messages to steal personal information, often while impersonating a well-known, legitimate company. The FBI’s Internet Crime Complaint Center reports that people lost $54 million during phishing schemes in 2020 alone.
Regardless of the scammer’s chosen method to attack, it’s important to know how you can protect your investment from a mortgage closing scam.
Steps to Protect Your Investment
1. Use a checklist. Before the closing process officially begins, it’s important to know who will be involved and what to expect. This checklist by the Consumer Financial Protection Bureau outlines what you should do before, during, and after closing.
Make reference to this checklist throughout the process so you can double check the names and contact information of trusted individuals. If you are co-signing a mortgage with someone else, ensure they have a copy of this checklist as well.
2. Talk to your lender directly and set up a plan. Whenever money will be transferred between parties, it’s imperative to know how much will be paid, who will receive the money, when they will receive it, and the method of transfer.
3. Question last-minute changes. Watch out for last-minute changes to details. Ensure you have the correct contact information and don’t respond to other phone numbers or emails. If you are contacted about a change – especially via email – call the lender, attorney, or agent directly.
Note: scammers often use language that makes you feel rushed. They may call or email you, stating that your closing date will be pushed out if you don’t respond and send money immediately. Keep your emotions in check and don’t let your guard down.
4. Call before transferring funds. When the time comes to actually wire the closing funds, call to confirm the names and account numbers before processing. Use the contact information of the trusted individuals from your closing checklist.
Consider bringing a close friend or relative with you as a second set of eyes. You’re not dealing with a small amount of money here – slow down and pay close attention. It can be very difficult to uncover a mistake when transferring funds.
5. Use technology wisely. Even when you’re not purchasing a property, it’s best practice to make use of strong passwords and limit what you share on social media. Phishing scams involve gathering personal information to build victim profiles.
You should also question suspicious links and only download trusted attachments. If something doesn’t feel quite right, it may not be.
6. Protect your identity. Unfortunately, identity theft affects about 1 in 20 Americans each year. Common identity theft schemes involve scammers stealing and using credit and debit cards, applying for loans or credit accounts, and using personal information to apply for government programs or tax refunds.
You can protect yourself and your family from identity theft and other fraudulent activities with low-cost protection from Lafayette Federal Credit Union. This protection includes the prevention, detection, and restoration if you’re ever the victim of identity fraud.
Report the Scam
Reporting a scam to the proper authorities is imperative. Even if you think you might have been scammed but feel you were able to put a halt to it, some of your information may still be compromised.
Time is of the essence during a scam, especially one involving money. The chance of recovering stolen funds after 24 hours lessens as time goes on.
If you think you’ve fallen victim and are in the early stages of a mortgage scam, call your financial institution or wire company and have them recall the transfer immediately. Then, report the crime to the FBI’s Internet Crime Complaint Center at IC3.gov. You can also call your local police department and regional FBI office.
Partner With a Trusted Financial Advocate Like Lafayette Federal
At Lafayette Federal Credit Union, we know that the rise of scams puts more and more people at risk of financial fraud every day. We care about our members’ online and financial safety, and our team members are trained to help you spot potential scams or abuse that could harm your financial wellbeing.
If you have concerns about a potential scam or believe you may be a victim to one, don’t be afraid to ask questions. Come into a branch, reach out to our call center, or learn more about protecting your identity online at Lafayette Federal.
Not a Lafayette Federal member yet? You can become a member by completing an online membership application, scheduling an appointment or walking into a branch, or scheduling a virtual meeting with a Business Development Officer.