Real estate wire fraud is on the rise. All parties in the real estate industry are vulnerable, especially first-time homebuyers, according to title industry officials.
"I know everyone is tired of hearing about wire fraud, but it is more relevant today than ever. Criminals are getting more creative and we need to work together and continue to inform our clients of things to look out for," Kathy Gamch, title and escrow AVP sales at Chicago Title Cupertino and Saratoga branches, told Realtors gathered at a Silicon Valley Association of Realtors district meeting.
Gamch and escrow branch managers and senior escrow officers Mary Dickerson and Hapi Yamato reminded Realtors that consumers continue to be duped by wire fraud. The losses are increasing each year. Email scams have been reported in all 50 states and in 150 countries. Last year, the Internet Crime Complaint Center received over 20,000 business email compromise complaints with adjusted losses over $1.2 billion.
According to the FBI, consumers average $8 million in losses reported each month due to wire fraud. Realtors, real estate brokers, closing attorneys, buyers and sellers are targets for wire fraud and many have lost hundreds of thousands of dollars because they simply relied on wire instructions they received via email.
How it works is a fraudster will hack into a participant's email account to obtain information about upcoming real estate transactions. After monitoring the account to determine the likely timing of a closing, the fraudster will send an email to the buyer purporting to be the escrow agent or another party to the transaction. The fraudulent email will contain new wiring instructions or routing information, and will request that the buyer send funds to a fraudulent account.
Dickerson said hackers are creative and tend to add a sense of urgency to their emails, like the need for immediate action. "That's why it's important for buyers in a transaction to pay extra close attention. If you notice inconsistencies in email addresses and domain names, or if there's a sudden, unexpected change in the email address that you're working with, call a trusted phone number and talk to someone who is working on your transaction - your Realtor, escrow officer, loan agent. Do not call phone numbers mentioned in the potentially fraudulent email."
The escrow officials urge buyers to "always inquire before you wire." They recommend a two-step process. First, obtain the phone number of your Realtor and your escrow officer as soon as an escrow is opened. Then, prior to wiring, call the phone number you received and speak directly with your escrow officer to confirm wire instructions. If you receive a change in wiring instructions supposedly from your escrow officer, be suspicious as wiring instructions are rarely changed.
"It is all of our responsibilities to protect our clients from being victims of wire fraud," stressed Yamato. "Over communicate to your clients about verifying in person or over the phone before wiring. One simple phone call can prevent a devastating loss!"
The title officials added the following tips for Realtors and their clients:
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.