Buyer Beware of Mortgage Wire Fraud: Here’s How To Not Get Scammed

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After what seems like an eternity, you’re finally ready to close on your dream home. You’re excited, stressed, and chomping at the bit to sign on the dotted line.

But during this time it’s easy for even the smartest homebuyer to get distracted—and scammed. Fraudsters take advantage of diligent homebuyers anxious to close by duping unsuspecting buyers into wiring them down payment and closing funds.

“Wire fraud is a very real thing that people need to be aware of, and it’s happening more and more over the last several years,” says Michael Perna, a real estate agent and CEO of the Perna Team in metro Detroit.

Here’s the critical information you need to know so you can hang onto your money—and your dream home.

Anyone can be a victim of wire fraud

We know—you’re a smart cookie with all of your homebuying papers in order. Unfortunately, mortgage wire fraud can happen to anyone.

Perna himself was a witness to mortgage fraud a couple of years ago.

“Another broker that had a buyer on one of our properties received fraudulent wire details,” he recalls. “The money was gone and out of the United States in a matter of minutes!”

While the homebuyer ultimately got the down payment back, the deal fell apart. The sellers moved on to a backup offer, and the homebuyer missed out on the house.

How scammers work

Like most online scams, mortgage wire fraud begins with hacking and phishing.

“And fraudsters don’t start by hacking on the customer’s side of the equation, but on the vendor’s side,” explains Daniel J. McBride, a licensed private investigator at American Eagle Investigations in New York City.

And that vendor is almost always the closing company. Scammers hack into the closing company’s website, database, and/or server.

“Then the malicious parties have access to all of the company’s prospective customers and their contact information,” says McBride.

How fraudsters try to trick you

Once the title insurance company’s secure email is hacked, even tech-savvy homebuyers can be fooled. Scammers use the closing company’s email formatting, aesthetics, and signatures to make everything look legitimate.

Clues to a mortgage wire scam are easily overlooked as fraudsters have perfected copying the brand they are impersonating.

For instance, the logo, company website, signature line, and domain name could be almost identical to the real closing company.

The email address might be very similar to the title company’s but just different enough that we don’t notice a “.com” instead of “.net.”

Any difference from a past email is a sign you might be a victim of fraud.

When scammers strike

First, fraudsters find homebuyers in the final stages of buying a home. Then they send an email with “new” instructions for wiring the money into their account.

Quite often, the reason for the email seems plausible—a new closing date, for example.

And it’s easy for you to get distracted amid the whirlwind of activity in the final days leading to the closing—and not notice an email looks any different from past correspondence.

For added measure, the thieves use wording that creates a sense of urgency for you to act quickly. A few clicks later, your closing funds/down payment money could be wired into the fraudster’s account and gone without a trace.

How to avoid mortgage wire fraud

As the cliche goes, knowledge is power.

“The best way to avoid scams like this is to discuss the closing process with your real estate agent and title company when you meet with them together for the first time,” says Rob Jackson, a fraud investigator at Reveille Advisors in Houston.

Here are some other important tips:

Get detailed instructions. If you’re expecting an electronic signature request from the closing company via email, ask them what platform—DocuSign, Dropbox, etc.—they are using. Get the exact email address it will be coming from, and request a follow-up call after you sign it. Stick with the initial contact methods. “Getting a text or email from a random number or email address saying they’re your title company with a new phone or email is a big red flag,” warns Jackson. Watch out for urgent messages. If you suddenly start getting emails stating there’s a pressing change to how you’re paying for the closing, immediately call the title company before clicking on anything. Be leery of emails that say, “wire instruction revision.” Never engage with any email or text that discusses any changes. “If someone is suggesting a change different from what you were instructed, call your title company immediately—do not email them,” McBride says.

Also, note that wire instructions never come from a real estate agent or mortgage company.

“Agents should never give wiring instructions to their clients, and mortgage companies shouldn’t either. Only the closing company,” says Perna.

It’s not that your agent or lender would do this, but a scammer could send an email that looks like it’s from them. Either way, ignore it and report it.

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