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Welcome To The Insighter!

Explore the latest happenings at Kirtland FCU and learn about important topics from around the financial world. Here’s your insight!

The Scam That Hits Home

06/25/2019
The Mortgage Team

It’s an exciting time. You’re getting ready to close the mortgage on a new home! Don’t let a scammer take it all away.

Anyone who has bought a house knows the vast amount of communication that is required between multiple parties. And if you’re a first-time homebuyer, you’re discovering this first-hand. Documents must be signed, wire payments arranged, and e-mail is a common channel for these types of quick communications with the multiple companies that can be involved in a single closing. Between 2015 and 2017, reports of a sophisticated scam involving these companies and homebuyers, primarily through e-mail, have increased 1,100 percent.

How it works:
The scam begins when a thief gains access to an e-mail account of one of these legitimate real estate, title, or lending companies through hacking. Once inside the e-mail account, they have access to all communication between buyers, sellers, agents, title companies, and lenders. The thief can see scheduled closing dates, and they now have access to private financial information regarding the sales.

Using this information, the thief chooses a sale that is approaching its closing date. The thief creates an e-mail that appears identical to one from the legitimate company. That e-mail is then sent to the buyer at the last minute, changing the payment information for the closing funds to the thief’s wire destination. If this information is followed and the money sent to the scammer’s new destination, the buyer will often have no idea anything has gone wrong until they are contacted by one of the companies asking about the missing payment. Meanwhile, the thief will move the funds and move on, before anyone is the wiser.

In some cases, victims have sent their intended closing costs or even the full payment for their new house to these fraudulent wire accounts. In 2017 alone, there was an estimated loss of nearly $1 billion in real estate transaction costs resulting from this scam. And the buyer is on the line for the lost funds—there is often little to no recourse for victims of this scam. Therefore, avoiding it is paramount.
  • Identify two trusted individuals to confirm the closing process and payment instructions. Ahead of your mortgage closing, discuss in person, or by phone, the closing process and money transfer protocols with these trusted individuals (realtor, settlement agent, etc.). Be cautious about exchanging any details about your closing over e-mail. You may want to use this opportunity to also create a code phrase, known only by these trusted parties, if you need a secure way to confirm their identities in the future. 
  • Write down their names and contact information. 
  • Before wiring money, always confirm instructions with your trusted representatives. Never follow instructions contained in an e-mail. Verify the closing instructions, including the account name and number, with your trusted representatives either in person or by using the phone number you previously agreed to.
  • Avoid using phone numbers or links in an e-mail. Again, scammers can closely replicate the email address, phone number and format of an exchange from your agents. Avoid clicking on any links or downloading attachments without first confirming with your trusted representatives.
  • Do NOT e-mail financial information. E-mail is never a secure way to send financial information. 
  • Be mindful of phone conversations. It may be difficult to identify whether a phone call is fraudulent or legitimate. Scammers may call and ask you to verify your personal or financial information. When in doubt, always initiate a call back to your trusted professionals to confirm whether it’s legitimate. 

What if you become a victim?

  • Contact your bank or wire-transfer company immediately. Ask for a wire recall. Reporting the error as soon as possible can increase the likelihood that you’ll be able to recover your money.
  • File a complaint with the FBI. Contact the FBI’s Internet Crime Complaint Center at www.ic3.gov .
When it comes to this scam, the low-tech option may be the best option. Hand-delivered cashier’s checks are often a more secure way to physically make a payment during the closing process.

At the Kirtland FCU Home Loan Center, the mortgage team maintains close relationships with their members and other companies in the mortgage process, which reduces the likelihood of this scam striking their members.

“This is one of the best parts of our dedication to relationships with our clients, and our local presence,” said Kris Jones, Vice-President, Mortgage. “Our members know us and know we’re right here, right now, for any questions like this. There are no long waits in a phone tree, no faceless representatives when they have concerns.”

And when a member already has their savings and/or checking accounts at Kirtland FCU, payment transfers are handled directly by the mortgage professionals without members needing to lift a finger (except to sign the final papers).
 
Remember, when you’re getting ready to close on a home, make sure you’re talking to the right people. Come see the mortgage experts at Kirtland FCU’s Home Loan Center.

Learn more about Kirtland FCU’s mortgage and home loan programs now!


 
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