October 1, 2017

CLOSINGS GOING HAYWIRE – Beware of Fraudulent Wire Instructions

A closing attorney gets an email from the seller’s attorney.  “So sorry for the last minute change,” she says, “but we had a problem with our client funds account and had to close it out.  Please send the proceeds using these instructions instead.”

 

A buyer gets an email from her loan officer.  “We’ve already sent the loan money to the closing attorney.  You just need to wire the balance of your down payment and closing costs to the same account.  I’ve attached the wire instructions.”

 

A seller, who needs the funds from the closing for the purchase of her new home in another state the next day gets an email from the escrow company.  “We can’t accept an out of state attorney’s check.  Please have them wire the funds using the attached instructions.”

 

In each of these examples, the email appears to be from someone you’ve been working with for weeks.  It’s got the same company logo, the same signature.  The sender clearly knows all about the transaction and references the property address, the parties and the closing date, maybe even the exact amount of money from the Closing Disclosure, all while keeping the tone and friendliness that characterized past emails.  It’s easy not to notice that the email address is just slightly different from all the other emails you’ve received.  Maybe it’s off by just one letter.  This is how wire fraud happens and it’s happening in real estate transactions across the country with alarming frequency.  

When cyber criminals are successful, the results are both messy and tragic.  Someone’s life savings is gone.  Parties find themselves with no money and no house.  Lawsuits may follow, but they don’t solve the nightmare unfolding in the moment.  

 

Given all the parties involved, email is a great way to communicate about real estate closings.  You can have a discussion with the buyer, seller, their attorneys and agents all at the same time.  The buyer, lender and closing attorney can work to finalize details and figures without awkward conference calls or multiple calls back and forth.  However, when a hacker finds a chain of email discussing a closing, he has all the information he needs to set a scam in motion.  

 

Whether you’re a first time homebuyer, an experienced investor, an attorney, a loan officer, a listing agent or anybody else involved in real estate transactions, you should be aware of this ongoing crisis and vigilant about wire instructions.

 

Never trust emailed wire instructions.  Always place a telephone call to the closing attorney or seller’s attorney before you wire funds.  In Massachusetts, you can look up any attorney on the Board of Bar Overseers website to ensure you have the correct phone number.  Verify each piece of the instructions before you initiate any wire.

 

The Law Offices of Sonja B. Selami is dedicated to protecting our clients and guarding against wire fraud.  Whether we are representing you personally or your lender, we welcome and encourage you to call us before wiring any funds in connection with your closing.

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