Mortgage Closing Scam
A Phishing & Financial Scam Affecting Homebuyers
Catalog of Scams – A SCARS Institute Resource
Catalog of Scams: Mortgage Closing Scam
A Mortgage Closing Scam is a sophisticated fraud that targets homebuyers, real estate agents, or attorneys during the closing process of purchasing a property. Scammers usually gain access to sensitive information by hacking into email accounts of those involved in the transaction, such as the buyer, the real estate agent, or the attorney. Once they have access, they monitor the communication related to the closing process, waiting for the moment when the buyer is about to transfer funds for closing costs or a down payment.
Scammers also gain knowledge by reviewing public records that often contain sensitive information about sellers.
The scam typically unfolds when the buyer receives an email, seemingly from their real estate agent, attorney, or mortgage lender, providing new wiring instructions for the transfer of funds. This email looks legitimate because it closely mimics the actual communication between the parties, often containing details specific to the transaction that the scammer obtained through their earlier hacking. However, the email is fraudulent, and the wiring instructions direct the funds to a bank account controlled by the scammer.
Because mortgage closings often involve large sums of money, these scams can result in significant financial losses for the victim. By the time the fraud is detected—usually when the legitimate parties inquire why the funds were never received—the money has already been transferred, often to accounts that are quickly emptied or routed through multiple foreign banks, making recovery nearly impossible.
Scammers take advantage of the urgency and time-sensitive nature of the mortgage closing process. Buyers may be under pressure to finalize the deal, making them less likely to carefully scrutinize the wiring instructions or confirm the authenticity of the request. Since the emails appear legitimate and are timed perfectly within the transaction timeline, victims often don’t question the changes in instructions.
The scam is facilitated through phishing attacks, where the scammer either tricks someone into providing email login credentials or installs malware that gives them access to email accounts. Once they are inside the email system, scammers monitor the communication, waiting for the opportune moment to send the fraudulent wiring instructions.
The fake email typically contains subtle changes to the sender’s address, like an extra letter or number, to make it look authentic. For example, an email from the real estate agent might come from a slightly altered address that the victim does not notice. The tone, language, and formatting of the email are often meticulously crafted to match previous legitimate correspondence, making it difficult for the buyer to detect anything suspicious.
The Mortgage Closing Scam is particularly devastating because it can jeopardize the entire home purchase, and victims may not have the resources to replace the stolen funds. Additionally, once the money is transferred, it is often moved quickly between various accounts, making it difficult for authorities to trace and recover the funds. This type of scam has become increasingly common with the rise of online real estate transactions and the increased reliance on email communication for sensitive financial dealings.
In summary, a Mortgage Closing Scam targets unsuspecting homebuyers by exploiting vulnerabilities in email communications to steal large amounts of money during the closing process of a property purchase. The scam relies on the victim’s trust in seemingly legitimate emails that contain fraudulent wiring instructions.
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A Question of Trust
At the SCARS Institute, we invite you to do your own research on the topics we speak about and publish, Our team investigates the subject being discussed, especially when it comes to understanding the scam victims-survivors experience. You can do Google searches but in many cases, you will have to wade through scientific papers and studies. However, remember that biases and perspectives matter and influence the outcome. Regardless, we encourage you to explore these topics as thoroughly as you can for your own awareness.
SCARS Resources:
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- Learn more about Scams & Scammers at RomanceScamsNOW.com and ScamsNOW.com
- Scammer photos ScammerPhotos.com
- SCARS Videos youtube.AgainstScams.org
- Self-Help Books for Scam Victims are at shop.AgainstScams.org
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