What Is Mortgage Wire Fraud?

You’ve nearly completed the lengthy, complicated and sometimes frustrating process of buying a home. You’ve found the property, negotiated a price, gotten approved for a mortgage, dealt with title searches, inspections, and all the rest of it, and at last you’re ready to close.

Then, suddenly, the money you put together for a down payment disappears. It’s gone, and your chance of obtaining the home you had your heart set on has vanished along with it.

It sounds like something you hear about on the news but not the kind of thing that could ever happen to you. It could, though, if you’re targeted for mortgage wire fraud.

Mortgage Wire Fraud: A New Version of an Old Con

The first successful electric telegraph system went into service in 1838, and 18 USC 1343, the Federal wire fraud statute of the US criminal code, made wire fraud a Federal crime in 1872. So you can see it didn’t take swindlers long to start using the new technology to take advantage of the unwary. The basic idea, which remains unchanged today, was to trick people into transferring money into criminal hands while under the impression that they were conducting a legitimate business transaction.

Money transfer scams remain a matter of great concern to the Federal government to this day, and small wonder. Since 2013, criminals committing mortgage wire fraud have stolen over $12 billion.

Here’s how modern mortgage wire fraud works:

Near to the day of closing, the mark receives an email that appears to be from the realtor or his or her attorney and pertains to the sale. The email looks legitimate, and how would a fraudster even know about the transaction?

The answer to that is that the criminals undertaking money transfer scams infect the realtor or attorney’s email program with malware. Once the malicious software is in place, a criminal can monitor email to see what transactions are coming up and to send fraudulent email when the time is right.

The fake email advises the mark that there’s been a change in plans, and he or she should now transfer the down payment to a certain bank account that is supposedly the seller’s.

In reality, the bank account belongs to the criminal committing wire transfer account, and it’s often overseas where US law enforcement can’t get at it.

The criminals committing these money transfer scams have even been known to phone their victims, pretend to be from the seller’s law office or the title company, and advise them that the transfer has gone through. The point of this is to delay the moment when the mark will realize that he or she has been conned.

Mortgage wire fraud is common partly because criminals don’t have to be technologically sophisticated themselves to commit wire transfer fraud. They just have to avail themselves of phishing kits and similar tools that are easy to find on the Internet. Mortgage wire fraud is also common because it pays so well. In some instances, criminals engaged in mortgage wire fraud have swindled potential homebuyers out of six-figure sums.

Sadly, that money’s often lost for good. It’s not usual for a bank to make restitution for such a money transfer because the victim did in fact instruct the financial institution to make it. It’s not the bank’s fault the victim was being tricked at the time. What’s more, as mentioned above, when wire transfer fraud results in the money going overseas, there’s often little US authorities can do about it.

Protecting Yourself from Mortgage Wire Fraud

Naturally, you don’t want mortgage wire fraud to happen to you. Here are some guidelines to keep you from becoming a victim.

First, be on the lookout for the possibility of mortgage wire fraud. Be aware that a criminal could target you and proceed accordingly. Email addresses you haven’t seen before and invalid account names are definite red flags, but their absence doesn’t mean communication is legitimate. Always check the validity of any suspicious messages. Don’t respond to them without making sure they really came from the people they purport to have come from. Calling known phone numbers should do the trick.
In other words, voice verify emails. Be particularly sure to verify them if they ask you to log in to a website you haven’t visited before, transfer money, give financial information, or e-sign something.
Ask your bank to voice verify. It’s not universally true, but if you ask, many banks will agree not to make a wire transfer without voice verification (or some other kind of secure verification) from you. This safeguard is more common for business accounts, but if you’re in the midst of a real estate transaction, you can certainly request it as well.

Mortgage Wire Fraud: The Worst Has Happened

If, despite your vigilance, you’ve somehow fallen victim to wire transfer fraud anyway, it pays to know that the FBI’s Financial Fraud Kill Chain (FFKC) may be able to get the money stolen via wire transfer fraud back for you.

There are several conditions that must be met. The sum involved has to be $50,000 or more, a SWIFT recall must have been initiated, the transfer must have been an international one, and the transfer must have happened within the past 72 hours.

If all that’s the case, you can start the FFKC process by contacting the FBI, possibly by visiting the website https://www.fbi.gov/contact-us/field-offices

The FBI will need the following information: your name, your location, the name of your bank, your bank account number, the beneficiary name, the beneficiary bank, the beneficiary bank account number, the location of the beneficiary bank f you know it, the intermediary bank if you know its name, the amount of the payment, the SWIFT number, the date, and your description of the incident. When you provide the description, be sure to include the use of phrases that might be significant like “in favor of” or “for further credit.”

So if you’re fallen prey to mortgage wire fraud, there may be a ray of hope if you act quickly by contacting the FBI, possibly local law enforcement, and your bank. But it’s vastly preferable not to allow criminals engaged in money transfer scams to get at your money in the first place.