Mortgage Scams plague Homeowners and Agents
There are things you should know before you purchase your next house—even if you foresee that being years away. Take note of what’s in this article—and keep the notes where you’ll never forget where they are.
A hacker could fool you into thinking he’s your agent and trick you into sending him money—which you’ll never get back. It’s so bad the FTC even sent an alert warning consumers that Real Estate Agents email accounts are getting hacked.
- Let’s say your Realtor’s name is Bill Baker.
- Bill Baker’s e-mail account gets hacked.
- The hacker observes Baker’s correspondences with his clients—including you.
- Ahhh, the hacker sees you have an upcoming closing.
- The hacker, posing as Bill Baker, sends you an e-mail, complete with instructions on where to wire your closing funds.
- You follow these instructions.
- But there’s one last step: kissing your money goodbye, as it will disappear into an untraceable abyss overseas.
- This scam can also target your escrow agent.
It’s obvious that one way to prevent this is to arrange a home purchase deal where there are zero closing costs.
The scam is prevalent, perhaps having occurred thousands of times. It was just a matter of time until scammers recognized the opportunity to target real estate agents and their clients.
The lax security defenses of the real estate industry haven’t helped. Unlike the entire financial industry who have encrypted communications, the real estate industry is a hodgepodge of free e-mail accounts and unprotected communications.
- Realtors, so often on the go and in a hurry, frequently use public Wi-Fi like at coffee houses.
- Anyone involved in a real estate transaction can be hacked, such as lawyers.
Preventing the Scam
- Eliminate e-mail as a correspondence conduit—at least as far as information on closings and other sensitive information.
- On the other hand, you may value having “everything in writing,” and e-mail provides a permanent record. In that case, use encrypted email or some setup that requires additional login credentials to gain access to the communication.
- For money-wiring instructions, request a phone call. And make this request over the phone so that the hacker doesn’t try to pose as your Realtor over the phone.
- Any e-mailed money instructions should be confirmed by phone—with the Realtor and the bank to send the money to.
- Get verification of the transfer ASAP. If you suspect a scam, have the receiving bank freeze any withdrawal attempt of the newly deposited funds—if you’ve reached the bank in time, that is.