How to avoid mortgage wire fraud at closing 

Buying a home is one of the biggest purchases many people will make in their lifetime. And during the mortgage closing process, emotions can run the gamut: excitement, anticipation, joy, fear and stress – it’s all there.  

Scammers know that the closing process is an emotionally vulnerable time for homebuyers, and there’s a growing threat of a specific type of fraud – known as mortgage wire fraud – that’s targeting consumers who are in the midst of completing this big financial transaction.  

The good news is, there are some signs to watch for and steps you can take to help protect yourself from mortgage lender scams. 

What is mortgage wire fraud? 

 Mortgage wire fraud – also sometimes called real estate wire fraud or mortgage closing fraud – is a scam that occurs when a homebuyer is tricked into sending a wire transfer to a fake bank account, often under the guise of requesting the funds for closing costs or a down payment.  Unfortunately, these scams are increasingly common.  

 The scammer may hack an email account at organizations like title companies or real estate agencies, to obtain personal information about payments that a homebuyer is expecting to send as part of the mortgage process. The scammer then poses as a trusted professional who’s involved with the home buying transaction, such as a real estate agent, a mortgage loan officer, or someone from a title company. They typically use an email address or phone number that looks legitimate and may even contain the homebuyer’s actual personal information to make the scenario seem more credible.  

 Often, the fraudster will send a message or make a phone call claiming that a check can't be accepted, that important funds were sent to the wrong account, or that a wire transfer is required immediately to prevent the home purchase from falling through.  The homebuyer then sends the funds requested, thinking that they’re doing as they should, and unfortunately discover that it was a scam after it’s too late.  

Recognize mortgage wire fraud red flags.

 Common warning signs of mortgage wire fraud are similar to what you might experience with many other types of financial scams:  

• Unusual requests: Watch for communications asking you to make sudden unexpected changes in payment instructions that are different than what you were previously told to expect with the mortgage closing process.  

• Urgency and pressure:  The process of buying a home can move fast and be emotionally charged. Scammers take advantage of that dynamic and often work to create an added sense of urgency in the hopes that you’ll move fast and avoid questioning anything that seems unusual or out of the ordinary.  

• Unprofessional communication: Keep an eye out for any communications that contain poor grammar or glaringly obvious typos. Of course it’s entirely possible for your actual real estate agent or mortgage loan officer to make an occasional typo – they’re human, after all! – but if you notice a significant shift in the tone of communication compared to what you’ve experienced from them previously, that could be a warning sign of a scammer.  

• Inconsistent information: If you’re seeing details in an email that don’t match up with what you were seeing in previous communications, that could be a potential red flag and is worth looking into.  

Take steps to protect yourself.

 Fortunately, there are many proactive steps you can take and best practices you can follow to help minimize your risk of falling victim to a mortgage wire fraud scam:   

• Establish clear payment procedures with trusted professionals. Set up clear payment process expectations with your mortgage loan officer and real estate agent right from the start. Well before your closing date, have a conversation with these trusted individuals in person, or by phone, to help you understand the closing process and what money transfer protocols to expect. Be cautious about exchanging any details about your closing over email. 

• Verify any payment changes directly with your mortgage loan officer or real estate agent. Always verify any change in payment instructions by speaking to your mortgage loan officer or real estate agent using known, trusted phone numbers. Avoid using email for these types of conversations. 

• Be skeptical of email.  Treat any email requesting wire transfers with suspicion, even if it appears to come from someone you know.  And NEVER send financial information over email.  

• Use strong passwords and security measures. Help prevent fraudsters from gaining access to your private information in the first place by ensuring that your email and online accounts are secure. Use best practices like setting up multi-factor authentication on your accounts, and use passwords that are complex and would be hard to guess.  

• Confirm details and instructions before wiring money. Before you send any funds via wire transfer, verify the closing instructions either in person or by using a known and trusted phone number.  

• Avoid using phone numbers or clicking links that you receive in an email. Scammers have the ability to spoof your trusted contacts’ email addresses, so avoid clicking on any links or downloading attachments without first confirming with them (either in person or via phone using a known phone number) that the email is legitimate.  

What to do if you suspect fraud

 If you do suspect that you’ve been targeted or have fallen victim to a mortgage wire fraud scam, now what? Act quickly and follow these tips:   

• Contact your bank or wire transfer service immediately to ask for a wire recall. Reporting the error as soon as possible can improve the changes that you’ll be able to recover your money.  

• Notify your lender and real estate agent and let them know that you think you’ve been a target of this scam.  

• Reach out to your local authorities to file a report. 

• Report the fraud to relevant agencies, such as the  FBI’s Internet Crime Complaint Center  or the Federal Trade Commission.   

So even with all the varying emotions involved with buying a home, staying vigilant and taking proactive measures about your financial security during the closing process can help to ensure you get to experience more of the joy, and less of the stress once closing day arrives.  

Get more tips to help keep your finances safe and secure.