Protect your identity and financial transactions during escrow.
It’s a hectic Friday afternoon at work. You’re scrambling to wrap up early so that you can get back to the apartment and finish packing for next week’s move. Your title and escrow closing process is finally at the end of the road and you’re looking forward to celebrating.
Excited about your new home purchase, closing next Wednesday, you spot an email from your escrow officer. She says there’s been a minor adjustment to your transaction and has included new wiring instructions, which you need to follow promptly to stay on schedule for next week’s property transfer. The email looks exactly like every other email she’s ever sent, right down to her signature. Without a second thought, you call your bank to initiate the transfer.
On Monday, packed and ready to go, you email your escrow officer to make sure the funds arrived. Perplexed, she says she never sent an email changing anything. A few phone calls later, to your horror, you discover that although the bank wired the funds to the account as instructed, that account didn’t belong to the escrow company. It went to an overseas account, and you can’t get it back.
The incidence of wire fraud schemes like these is rising sharply. According to the FBI, between December 2016 and May 2018, businesses and consumers reported a 136% increase in losses related to these kinds of crimes. Fraudulent transfers have been sent to 115 countries, and losses since 2013 have topped $12 billion.
Real estate transactions have become attractive targets for cyber criminals for good reason. The National Association of Realtors notes that the average person has been in their home for 14 years as of 2018. Given how infrequently most people buy or sell property, they are understandably unfamiliar with the closing process, and one can see how they might fall prey to cyber criminals. In our example above, a simple call to the escrow officer, confirming the contents of the email, would have prevented the homebuyer from losing funds to fraud.
But it’s not just wire fraud that home buyers and sellers need to worry about. Protecting your personal and financial information against identity theft is another serious, ongoing concern. During any real estate transaction, personal and financial information must be shared with lenders, real estate agents, escrow officers, attorneys and title agents. This may include social security numbers, driver’s licenses, passport IDs, tax returns, pay stubs, credit card, bank and investment account information.
Hackers can break into your email, harvest attachments and use that information to impersonate you. Social Security numbers can be sold to undocumented workers who can then access services, obtain fraudulent IDs, file false tax returns or open credit card accounts. Stolen bank information can be used to empty your account. Cleaning up after identity theft can take years and cost thousands in legal fees.
Given the sensitive information that must be exchanged during a real estate transaction, you must be vigilant throughout the escrow process—from signing the sales contract to applying for a mortgage and throughout the entire closing process.
Here are some tips to keep you safe during your next property sale or purchase:
At Endpoint, we have built a Title and Escrow technology platform and process that is designed to minimize the opportunity for wire fraud and other cyber crimes. Nevertheless, when dealing with large sums of money and sensitive information, don’t be afraid to follow up with an old-fashioned phone call to your title agent, escrow officer and real estate agent, just to make sure everyone is in sync. Safe escrow is smart escrow.