Mortgage Closing Scams
Helping U.S. Home Buyers Understand an Insidious Financial Scam
How Scams Work – A SCARS Insight
Authors:
• SCARS Institute Enecyclopedia of Scams Editorial Team – Society of Citizens Against Relationship Scams Inc.
• U.S. Consumer Financial Protection Bureau
Article Abstract
Mortgage closing scams are a growing threat, with scammers increasingly targeting homebuyers during the closing process by posing as real estate professionals to divert closing funds into fraudulent accounts.
These scams, involving sophisticated phishing tactics, have resulted in significant financial losses, with reports rising 1,100 percent since 2015. To protect yourself, identify two trusted individuals to confirm closing instructions, discuss transfer protocols in person or by phone, and avoid sharing financial details over email. Always verify instructions independently and be cautious with email and phone communications.
If scammed, contact your bank immediately for a wire recall and report the incident to the FBI.
For more information, refer to the U.S. Consumer Financial Protection Bureau’s resources at www.consumerfinance.gov.
Mortgage Closing Scams: How to Protect Yourself and Your Closing Funds from Loss to Scammers
Closing on a new home can be one of your most memorable life moments. It’s the final and one of the most critical stages in the home-buying journey, but with the exchange of key paperwork and a sizable down payment, it can also be a stressful experience, especially for first-time homebuyers. Especially if you get caught in Mortgage Closing Scams.
Mortgage Closing Scams
The FBI has reported that Mortgage Closing Scams and scammers are increasingly taking advantage of homebuyers during the closing process. Through a sophisticated type of phishing scam, they attempt to divert your closing costs and down payment into a fraudulent account by confirming or suggesting last-minute changes to your wiring instructions. In fact, reports of these attempts have risen 1,100 percent since 2015, and in 2017 alone, there was an estimated loss of nearly $1 billion in real estate transaction costs.
While it’s easy to think you may not fall for this kind of scam, these schemes are complex and often appear as legitimate conversations with your real estate or settlement agent. The ultimate cost to victims could be the loss of their life savings.
Here’s What You Should Know and How To Avoid it Happening to You
Mortgage Closing Scams – How They Work
Scammers are increasingly targeting real estate professionals, seeking to compromise their email in order to monitor email correspondences with clients and identify upcoming real estate transactions. During the closing process, scammers send spoofed emails to homebuyers – posing as the real estate agent, settlement agent, legal representative, or another trusted individual – with false instructions for wiring closing funds.
How to Avoid Mortgage Closing Scams
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 email. 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. Use the U.S. Consumer Financial Protection Bureau’s Mortgage Closing Checklist to list these individuals and their primary phone numbers.
Before wiring money, always confirm instructions with your trusted representatives. Never follow instructions contained in an email. 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 email. 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 email financial information. Email 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 refer back to your trusted professionals to confirm whether it’s legitimate.
What to do if Mortgage Closing Scams Happen to You
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.
While it can be easy to think you’ll never fall for a scam of this nature, the reality is that it’s becoming more and more common, and the results can be disastrous for eager homeowners. By being mindful and taking a few important steps ahead of your closing, you can protect yourself and your loved ones.
To learn more about the closing process, including how to prepare for your closing and common pitfalls to avoid, check out the U.S. Consumer Financial Protection Bureau’s Mortgage Closing Checklist.
For information and resources for each stage of the home-buying journey, visit the U.S. Consumer Financial Protection Bureau’s Buying a House tool.
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Important Information for New Scam Victims
- Please visit www.ScamVictimsSupport.org – a SCARS Website for New Scam Victims & Sextortion Victims
- Enroll in FREE SCARS Scam Survivor’s School now at www.SCARSeducation.org
- Please visit www.ScamPsychology.org – to more fully understand the psychological concepts involved in scams and scam victim recovery
If you are looking for local trauma counselors please visit counseling.AgainstScams.org or join SCARS for our counseling/therapy benefit: membership.AgainstScams.org
If you need to speak with someone now, you can dial 988 or find phone numbers for crisis hotlines all around the world here: www.opencounseling.com/suicide-hotlines
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:
- Getting Started Right: ScamVictimsSupport.org
- Sextortion Scam Victims: Sextortion Victims Support – The Essentials (scamvictimssupport.org)
- For New Victims of Relationship Scams newvictim.AgainstScams.org
- Subscribe to SCARS Newsletter newsletter.againstscams.org
- Sign up for SCARS professional support & recovery groups, visit support.AgainstScams.org
- Join our Scam Survivors United Chat & Discussion Group facebook.com/groups/scam.survivors.united
- Find competent trauma counselors or therapists, visit counseling.AgainstScams.org
- Become a SCARS Member and get free counseling benefits, visit membership.AgainstScams.org
- Report each and every crime, learn how to at reporting.AgainstScams.org
- 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
- Donate to SCARS and help us help others at donate.AgainstScams.org
- Worldwide Crisis Hotlines: https://blog.opencounseling.com/suicide-hotlines/
Other Cyber Resources
- Block Scam Domains: Quad9.net
- Global Cyber Alliance ACT Cybersecurity Tool Website: Actionable Cybersecurity Tools (ACT) (globalcyberalliance.org) https://act.globalcyberalliance.org/index.php/Actionable_Cybersecurity_Tools_(ACT)_-_Simplified_Cybersecurity_Protection
- Wizer Cybersecurity Training – Free Security Awareness Training, Phishing Simulation and Gamification (wizer-training.com)
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