A warning for anyone buying or selling a home, or working in the real estate industry: 8News has uncovered scammers are targeting those closing or settlement transactions.
It’s become common in real estate to wire closing funds because it’s easy and convenient. But now, mortgage wire fraud has become the fastest growing form of real estate cybercrime.
8News first learned about it when a viewer selling her home reached out to 8News for help.
“It’s definitely frustrating,” Amanda Riley said. “It’s very stressful.”
What seemed like an easy sell has turned into a nightmare for her.
Riley says she relocated to Texas for work and decided to put her Henrico home on the market.
“We listed this summer in July and the property went under contract a couple weeks later,” she explained. “I thought, done deal.”
The next day, however, she knew this was a deal gone wrong. The mortgage payoff from the sale of the home was supposed to be wired to chase bank. Yet Chase was still showing a balance of more than $177,000 dollars.
“They were able to determine the funds were never received and thus my account couldn’t be credited,” Riley said, now a victim of mortgage fraud.
Usually, it begins with a phishing email where the hacker tries to get the buyer, seller, title company, settlement attorney, anyone involved in the closing or settlement to change the money wiring instructions.
In Riley’s case, it appears someone was able to breach the title office, get a copy of a fax and change the account number.
“Unfortunately I don’t think it was questioned,” she tells us.
Riley’s payoff was likely deposited into a fraudulent account and straight in the hands of scammers.
“It is an enormous problem,” FBI special agent Michael French told 8News.
French and Virginia State Police special agent Robert Brown told 8News that Virginia ranks 6th in the country for this kind of real estate cybercrime.
“We usually get one to two calls a week,” French explained.
“It has increased exponentially over the last two or three years,” Brown added.
He’s not kidding: Try a 1,100 percent increase since 2015, according to data from IC3 — the FBI’s internet crime complaint center.
Last year, the loss for victims just in the Richmond region was nearly $2 million dollars.
“The individuals doing this are professionals,” French said. “It is organized groups that do this type of thing. It is not the teenage hacker in the hoodie sitting in a basement.”
Once in, the hackers can spend months tracking real estate deals. They learn the lingo, names and signatures of all involved before they strike. So, when they do, it is very difficult to tell what’s real and what’s fake.
“Recently I heard phone calls were being tweaked a little bit so you think you are actually talking to an attorney or a settlement agent,” former Virginia Realtors President Claire Forcier-Rowe said.
Virginia Realtors has been monitoring and warning realtors about the uptick in the crime. Forcier-Rowe says it’s wiping people of their savings.
“We are seeing funds from $100,000 to well over $700,000 being attacked,” she said.
What can you do to protect yourself?
Laura Farley, General Counsel for Virginia Realtors, says double, triple check those account numbers and don’t move any money until you verify that email or call. It might also be a good idea to do it in person.
“You don’t want to call a number that was provided to you in an email, because that is the hacker giving you their phone number,” warns Farley.
Farley and the FBI have recommendations for businesses and agents, too.
“Make sure you have a complicated password,” Farley said.
She also says two-step authentication for logging in. The FBI recommends business turn on logging so they can monitor who is logging in and when.
“Require at least two people in the business to approve or change wiring instructions,” she said.
Farley says it is also a good idea to question your potential realtor, title agent and settlement attorney about security measures they have in place. She says ask is they use two-step authentication and if they have a system in place for checking wiring transactions. She also says ask if they have cyber insurance; it could help.
Lastly, you could always close the old-fashioned way: Do it in person with a cashier’s check.
If you do fall victim, contact the FBI immediately. You can file a complaint here.
“Speed is definitely of the essence there,” Brown said. “The FBI has indicated if they are alerted within 48 to 72 hours they have a pretty good probability of getting those funds back.”
The FBI is investigating Riley’s case, but four months later, she says, “I am stuck in the middle.”
Since the bank still hasn’t been paid, the first month Riley got stuck paying the mortgage for a home she sold.
The buyer’s title company has picked up the tab since, but each month she’s left worrying she may have to foot the bill.
“It is still reporting on my credit report, but I no longer have ownership to the property,” she explains.
An attorney for First Title, the seller’s title company, tells 8News it’s their belief they were not responsible for the transferring of any funds. They blame Piedmont Title, the buyer’s title company.
First Title said they are cooperating with the FBI. Piedmont Title tells 8News they were victimized, too.