As our world becomes more connected through technology, the added conveniences bring new forms of theft and fraud. High dollar real estate transactions are prime targets for today’s modern con artist. With hundreds of thousands of dollars moving electronically in almost every real estate transaction, the likelihood of an online thief getting in the middle of a deal increases.
Penny Crook-Reynolds, a well known and seasoned industry pro from Denver’s Canyon Title Company, has seen the increase in wire fraud over the last couple of years. She was kind enough to provide some insight and tips for our Denver real estate community.
While the issues with wire fraud are nationwide, Penny says Denver has experienced an increase, but awareness has helped bring more attention to the issue.
Penny: “I believe fraud has been around for some time, but in the past couple years, more people have been affected, so there is a greater awareness. In the past, we saw fraud in the form of counterfeit cashiers checks. As title companies updated their ‘best practices’, most companies require funds in excess of $15,000 be presented in the form of a wire, no longer a cashier’s check. With that implementation, along comes wire fraud”.
Sometimes we don’t know when we are heading into danger. What is a typical scenario for wire fraud to happen?
Penny: “A typical scenario is when the borrower receives an email from what appears to be the title company or what appears to be their agent, and the email creates a sense of urgency for the borrower to wire their closing funds to the title company – usually 3 days prior to closing. Wire instructions for the ‘fake title company’ are usually included in the body of the email. The email will look very official and authentic, however, if you look closely at the sender’s email address, it will usually be a few letters different from the real title company or agent’s email address”.
Protecting Your Assets
This is clearly an industry-wide issue. What steps have title companies in general taken? What has Canyon Title done?
Penny: “The biggest thing a title company can do is to bring awareness to the consumer. At Canyon Title, when the earnest money is delivered to us, we provide a document outlining and explaining the pitfalls of wire fraud and how to avoid being a victim.”
“We open a dialogue with the buyers, agents and the escrow team so everybody is aware that we will not email wire instructions and if they see something suspicious, please let us know. At closing, if the seller is requesting a wire transfer for their proceeds, we require them to complete the wire instructions form for their banking institution at the closing table. We do not take this information over the phone. These instructions require the seller’s signature”.
What advice do you have for today’s buyers and sellers in the Denver real estate market?
Penny: “Before you send any money via wire, PICK UP THE PHONE. I encourage folks to call the title company directly, not the phone number that may be found in one of these fraudulent emails, but look up the title company’s phone number through Google. Call the main line and ask for your escrow team to confirm wire instructions before initiating any money to be sent. If you can’t reach your escrow officer, ask for a manager. They will be able to confirm wire instructions as well”.
“If you’re selling your house and you want your proceeds wired to your account, it’s very simple to bring your checkbook to closing. A voided check will be able to give your title company the ABA Routing number and your account number”.
Agents Big Role
Denver Realtors need to be keenly aware of the illegitimate practices leading to wire fraud as well. The agent, who is directly connected to their client and transaction, should be the continuous alarm warning about the dangers of wire fraud. What advice do you have for the agent?
Penny: “Agents, your biggest value add to your client is bringing awareness of the potential of wire fraud. Open communication with them to be on the lookout for suspicious emails. Agents, make sure your security settings on your email accounts are up to date. Gmail and Yahoo accounts are prime areas for hacking”.
The takeaway here for buyers, sellers, agents and anyone involved in the real estate transaction is to always confirm by phone, or better yet, in person, where money should be wired to. Additionally, always be suspicious of e-mails, especially when they are providing directions for sending money. Don’t worry – everyone authentically involved in the transaction will understand. Make a phone call before sending critical banking information through e-mail.