April 7, 2022
How can lenders help prevent wire transfer fraud?
For experienced mortgage lenders, the scenario is all too common. But, just before their closing date, the borrower receives an email providing new instructions on how and where to wire the funds for their new home. They dutifully wire the funds, only to discover that the title company never received the wire transfer. What happened, and where did the money go?
Wire transfer fraud begins long before a client’s closing date. Fraudsters, hoping to bank a borrower’s down payment, begin their reconnaissance well in advance. They start by gathering information on the borrower, the lender, the real estate agent, and the title company. They may use phishing attacks to gain access to the email accounts of trusted individuals, allowing them to send legitimate emails to mortgage or real estate clients. These emails may include copies of company logos and actual mortgage documents to make their communications appear legitimate.
After monitoring the lending process from the sidelines, they choose the final days before closing to make their move. Impersonating a trusted team member, they send out new instructions to wire the funds to an account within their control. It can be days before the error is caught, making it virtually impossible to reverse. Borrowers may have to walk away from their dreams without the proper funds, and lenders may be left empty-handed.