Closing on a new home can be one of your most memorable life moments. It’s the final and one of the most critical stages in the home-buying journey, but with the exchange of key paperwork and a sizable down payment, it can also be a stressful experience, especially for first-time homebuyers.
The FBI has reported that scammers are increasingly taking advantage of homebuyers during the closing process. Through a sophisticated phishing scam, they attempt to divert your closing costs and down payment into a fraudulent account by confirming or suggesting last-minute changes to your wiring instructions. In fact, reports of these attempts have risen 1,100 percent between 2015 and 2017, and in 2017 alone, there was an estimated loss of nearly $1 billion in real estate transaction costs.
While it’s easy to think you may not fall for this kind of scam, these schemes are complex and often appear as legitimate conversations with your real estate or settlement agent. The ultimate cost to victims could be the loss of their life savings.
Scammers are increasingly targeting real estate professionals, seeking to compromise their email in order to monitor email correspondences with clients and identify upcoming real estate transactions. During the closing process, scammers send spoofed emails to homebuyers – posing as the real estate agent, settlement agent, legal representative or another trusted individuals – with false instructions for wiring closing funds.
How to avoid a mortgage phishing scam
Use the Bureau’s Mortgage Closing Checklist to list these individuals and their primary phone numbers.
Never follow instructions contained in an email. Verify the closing instructions, including the account name and number, with your trusted representatives either in person or by using the phone number you previously agreed to.
Contact your bank or wire-transfer company immediately. Ask for a wire recall. Reporting the error as soon as possible can increase the likelihood that you’ll be able to recover your money.
File a complaint with the FBI. Contact the FBI’s Internet Crime Complaint Center atHERE.
Check out the CFPB produced video - "What Homebuyers Need to Know About Mortgage Scams"
While it can be easy to think you’ll never fall for a scam of this nature, the reality is that it’s becoming more and more common, and the results can be disastrous for eager homeowners. By being mindful and taking a few important steps ahead of your closing, you can protect yourself and your loved ones.