You probably dodge all those calls about your car's extended warranty and the free cruise tickets you've just won, but there's one call you definitely want to answer.
It's the one from your mortgage lender and title agent if you're preparing to wire transfer large amounts of money to complete a house sale.
Scammers love wire transfers, and it turns out that navigating the process safely begins with a simple phone call.
When mortgage lenders made the switch to using wire transfers around 2015—moving from the traditional cashier's check route that had become plagued with scammers—the scammers were ready to pounce. They know that once you initiate a wire transfer it's difficult to get your money back, said Julie Haddock, senior home loans market leader for BOK Financial Mortgage℠.
"They use various versions of phishing scams, their goal being to redirect your down payments or closing costs into their fraudulent account by suggesting last-minute changes to the wiring instructions."
During a legitimate wire transfer, borrowers receive instructions from the title company on how to order the wire transfer—by email or text message, Haddock said. Any changes will come directly from the title company. Prior to any transfer of funds, borrowers should call their closing or mortgage team directly to verify the information is accurate, she said.
"I recently heard of a client who was scammed out of the down payment for her house because she received an email she thought was from a legitimate account," said Haddock. "She used falsified wiring instructions and lost her down payment money and did not have enough money in savings to replace it. This could have easily cost her the mortgage—and the house.
Haddock said the woman reached out to BOK Financial Mortgage for help. "We helped her navigate through that crisis, and she was able to retrieve her money back and is now in her dream home. Not everyone is so fortunate," Haddock said.
Moving parts
Around 13,638 people were victims of wire fraud in the real estate and rental sector in 2020 (a 17% increase over 2019) with losses of more than $213 million, according to the National Association of Realtors. In fact, real estate and rental wire fraud rank seventh out of more than 30 types of fraud tracked by the FBI's Internet Crime Complaint Center.
"Wire transfers are a perfect storm for fraud with all of the moving parts," Haddock said.
That's because there are large amounts of money being transferred and multiple people involved that you've likely not worked with before. It's a process most people don't use often, and there's a sense of urgency as everyone tries to meet the target closing date.
To minimize your risk, Haddock offered the following suggestions:
- Be skeptical of any last-minute changes sent via email or text message.
- Call your trusted lender or title agent to confirm the instructions and ask questions.
- Never send financial/banking information via text or email.
- Don't be afraid to ask questions.
- Use email security best practices.
- Consider wire transfer insurance.
"Even if you've ordered a wire transfer before—and even if you've used that lender or agent before—it's best not to assume you know the wiring instructions," said Haddock. "When in doubt, pick up the phone and talk to the folks working with you to secure that mortgage loan before opening a message or clicking on a link if you're not expecting it."
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