Real Estate Wire Fraud: How to Keep Your Transaction Secure
Nowadays, we’ve all heard of real estate wire fraud scams that have cost many people their life savings.
One example that illustrates the devastating consequences of real estate wire fraud is a Colorado couple that sold their house in order to make a down payment on a new home closer to their son. Since the wiring instructions on the final closing statement matched the previous instructions, including the number for the amount to be wired, the couple didn’t suspect a scam. Unfortunately, they lost $272,000 to fraud and ended up living in the basement of their son’s home.
Although real estate professionals, lenders, attorneys and title insurance companies owe a duty of care to their customers and must do everything they can to prevent scams, real estate wire fraud can and does happen. Once it happens, the money is likely gone forever.
The best way to prevent and deal with potential real estate wire fraud is to follow the three steps described below.
Step #1: Avoid wire-transfer scams.
A few things you can do to prevent wire-transfer scams are:
- Double check every wire transfer request;
- Confirm any requests received from your mortgage broker, real estate agent, attorney or title insurer by calling the numbers on their websites; never use the information provided in the message to contact them;
- Verify the authenticity of wiring instructions and of any subsequent changes with the sender;
- If you observe any suspicious activity in your email account, change your password and contact the service provider immediately;
- Before wiring the money, double check the name of the seller and the address.
Step #2: Prevent identity theft.
According to the FDIC, the easiest way to avoid identity theft and real estate wire fraud, implicitly, is to:
- Share personal information only with the people/organizations you know;
- Never provide personal details like financial information, Social Security number, driver’s license number, complete address, etc. to people or organizations that contact you, even if the email or website looks legitimate;
- Choose passwords that would be difficult to guess and don’t keep sensitive personal information on your computer;
- Make sure the antivirus program you have on your computer is up-to-date.
Step #3: Protect your investment with title insurance.
Sometimes, real estate wire fraud is related to title fraud. Title fraud occurs when someone else steals your identity and forges documents and signatures to get a mortgage in your name or sell the home you own.
If you don’t have an owner’s title insurance policy and become a victim of title fraud, the first thing you need to do is prove that the fraud has occurred. Then, you need to defend and restore the title, and remove any mortgages taken out by fraudsters at your own expense. The losses associated with real estate wire fraud can add up to thousands of dollars.
Although title insurance cannot prevent this type of fraud, the right owner’s policy will provide protection against the financial losses resulting from most forms of title fraud.
Buying or building a home in the Florida Panhandle might be the biggest investment of your life. Doing everything you can to avoid real estate wire fraud and title fraud is key not only to protecting your investment but also to enjoying your dream home for many years to come.