Mortgage Wire Fraud is a Serious Threat that Surged Almost 500% in Recent Years
By Elizabeth Stewart @ Real Estate Daily
February 1, 2018

Mortgage fraud has been relatively easy to avoid thinking about for most industry professionals. A new type of fraud, however, is growing with rapid pace and threatening to claim billions in buyer down payments.

Key Takeaways

  • Mortgage wire fraud reported by title companies increased 480% in 2016
  • Perpetrators targeted $5.3 billion in the mortgage industry alone
  • Criminals are hacking lenders, title companies, and real estate professions to trick buyers into wiring their down payment to scammers

Brief

Mortgage fraud has been on the fringe of most conversations in the mortgage industry for the past few years, but it is time to address this growing threat, says Joseph Murin, chairman of JJAM Financial Services.

Mortgage wire fraud, also known as down payment wire fraud, is a new type of scam that skyrocketed in activity last year and is now targeting billions in buyer down payments. What’s worse, the criminals performing this fraud use sophisticated and organized tactics that trick even the savviest buyers.

The scope of this emerging threat is immense. This thriving fraud affects everybody involved in the mortgage industry or mortgage transactions in any way, and it will take the entire mortgage industry to thwart the problem.

Mortgage wire fraud is hard to fight because it is an international threat that can be extremely difficult to track. Fraudulent transfers have been rerouted to over 100 different nations, showing that perpetrators operate from a variety of different countries.

Scammers are expanding and developing operations with scary sophistication. These international perpetrators use things like phone porting technologies to mask their number to resemble the buyer’s agent, title agent, and more. Other tactics include contacting buyers in times of uncertainty or stress and hacking the title company for confidential information about the transaction.

Wire fraud perpetrators usually target the easiest target in the mortgage process. The safety of a buyer’s down payment relies on the competence of their title agent; closing professional; vendor manager, and correspondent lender. Buyer will have the best chance of avoiding the issue if they thoroughly vet every party involved in the process, says Joseph Murin.