| Subject: Wire Fraud Red Flags-Please Share Info with Your Clients |
Date: July 18, 2019 at 11:41:44 AM CDT
HAPPY THURSDAY GUYS!
JULY & HOT in PARADISE; BUT OUR RATES ARE EXTREMELY COOL!
Wanted to share another alarming scenario regarding a buyer receiving emails regarding wire transfer instructions for closing funds- Another FBM mortgage banker in our TN area was working with a client preparing for their closing. The client had received an email that appeared to be ligit from the closing agent with wire transfer instructions. He followed the instructions received, wiring over $200,000. Unfortunately, the $200,000 ended up in the wrong hands! Buyer is out the $200,000 and could not close on his new home purchase!
I always ask the closing agent and client to communicate directly regarding wire transfer instructions and details. I am sure, you do the same. So very important!
Please SEE BELOW from our fraud team – info and tips to share with your clients! Let’s take those extra steps to make sure, this does not happen in our market!
Thanks
Good Morning All,
Wire Fraud remains to be a topic that we should keep in the forefront of daily activities. The very nature of real estate transactions—large amounts of money transferring between parties—makes them a prime target for criminals!
Real estate transactions have been a particularly lucrative target for Email Account Compromise (EAC) schemes. The large dollar volumes involved in such transactions, whether for down payments on a property or the final transfer of proceeds upon closing, are an attractive target of opportunity for criminals engaged in EAC activity. Criminals often target potential vulnerabilities of common real estate-related business processes:
- a)Readily availability detailed public information regarding potential real estate transactions and counterparties
- b)General communication of transactions between real estate counterparties conducted via email
- c)A common lack of strong authentication processes for verifying identity and validity of instructions in associated communications
- Lately, these schemes are increasingly targeting homebuyers, as opposed to targeting mortgage or title companies that have adopted authentication processes. It is important that we educate our borrowers about the possibility of this scam through constant conversation and advising them to ALWAYS call to verify ANY communication regarding the wiring of funds.
Below is a summary of how these schemes work and potential red flags that aid us in identifying an attempt of wire fraud. As always should you have any questions or want to discuss further details do not hesitate to contact me.
E-Mail Account Compromise (EAC) Schemes
EAC schemes target individuals. Individuals who conduct large transactions through financial institutions, buyers, lending entities, real estate companies, title companies and law firms are the most likely targets of this type of scheme. EAC schemes often take the following forms:
Scenario 1 – Lending/Brokerage Services: A criminal hacks into and uses the e-mail account of a financial services professional (such as a broker or accountant) to e-mail fraudulent instructions, allegedly on behalf of a client, to the client’s bank or brokerage, to wire-transfer client’s funds to an account controlled by the criminal.
Scenario 2 – Real Estate Services: A criminal compromises the e-mail account of a realtor or of an individual purchasing or selling real estate, for the purposes of altering payment instructions and diverting funds of a real estate transaction (such as sale proceeds, loan disbursements, or fees). Alternately, a criminal hacks into and uses a realtor’s e-mail address to contact an escrow company, instructing it to redirect commission proceeds to an account controlled by the criminal.
Scenario 3 – Legal Services: A criminal compromises an attorney’s e-mail account to access client information and related transactions. The criminal then e-mails fraudulent transaction payment instructions to the attorney’s financial institution. Alternatively, the criminal may compromise a client’s e-mail account to request wire transfers from trust and escrow accounts the client’s attorney manages.
EAC Fraud Red Flags
Success in detecting and stopping EAC schemes requires careful review and verification of transaction instructions and consideration of the circumstances (timely to loan closing; parties involved; dollar amount) surrounding such instructions.
EAC schemes may exhibit suspicious behavior, which can be identified by one or more of the following red flags:
- A customer’s seemingly legitimate e-mailed transaction instructions contain different language (including incorrect spelling), timing, and amounts than previously verified and authentic transaction instructions.
- E-mailed transaction instructions include markings, assertions, or language designating the transaction request as “Urgent,” “Secret,” or “Confidential.”
- Transaction instructions originate from an e-mail account closely resembling a known customer’s e-mail account; however, the e-mail address has been slightly altered by adding, changing, or deleting one or more characters. For example:
Legitimate e-mail address
Fraudulent e-mail addresses
- E-mailed transaction instructions direct payment to a known beneficiary; however, the beneficiary’s account information is different from what was previously used.
- E-mailed transaction instructions are delivered in a way that would give the financial institution, borrower, or attorney limited time or opportunity to confirm the authenticity of the requested transaction.
Sandy
Mortgage Fraud Manager