How to avoid mortgage wire fraud at closing

Buying a home is one of the largest financial transactions many people will make. It can also be a fast-moving and stressful process involving multiple parties, instructions and deadlines.

Criminals may take advantage of this environment by impersonating someone involved in the transaction and sending fraudulent payment instructions. Understanding how these scams work and verifying information before sending money can help protect your closing funds.

What is mortgage wire fraud? 

Mortgage wire fraud, sometimes called real estate wire fraud or mortgage closing fraud, occurs when a homebuyer is tricked into sending closing costs, a down payment or other funds to an account controlled by a scammer.

A scammer may gain access to an email account belonging to a homebuyer, real estate professional, lender, attorney, closing agent or title company. The scammer then uses information about the transaction to impersonate someone the buyer trusts.

They may also create email addresses, text messages, phone numbers or documents that appear legitimate without compromising an actual account. They may use stolen personal information, spoofed contact information or technology that manipulates voices or images to make the request more convincing.

The message may claim that:

• Wiring instructions have changed.
• A check or another payment method can no longer be accepted.
• Funds were sent to the wrong account.
• Additional money is required to complete the closing.
• The transaction will be delayed or canceled unless payment is sent immediately.

Because the message may include accurate names, property information, closing dates or payment amounts, it can look authentic. Correct information alone does not prove that a payment request is legitimate.

Recognize mortgage wire fraud red flags.

• New or revised wiring instructions: Treat every change in payment instructions as a potential fraud attempt, even when it appears to come from someone you know.
• Unexpected requests: Question any request for a wire transfer or other payment that differs from the process previously explained to you.
• Urgency or pressure: Be suspicious if someone pressures you to send money immediately or claims the transaction will fail if you take time to verify the request.
• Requests for secrecy: A scammer may tell you not to contact your lender, title company or real estate professional.
• Changes in contact information: Watch for unfamiliar phone numbers, altered email addresses or messages sent from personal accounts rather than established business accounts.
• Inconsistent details: Look for changes in account numbers, routing numbers, names, payment amounts or closing procedures.
• Unusual communication: Pay attention to changes in tone, writing style or communication method. Do not rely solely on spelling or grammar errors because fraudulent messages can be polished and convincing.
• Unexpected links or attachments: Avoid opening links or files until you have confirmed the communication through a separate, trusted channel.

Take steps to protect your closing funds.

Understand the payment process early.

Before closing, ask your mortgage loan officer, closing agent or title company:

• How and when you will receive payment instructions.
• Whether wiring instructions could ever change.
• Who is authorized to provide those instructions.
• What phone number you should use to verify the information.
• What you should do if you receive an unexpected payment request.

Save trusted contact information at the beginning of the transaction rather than relying on information supplied in a later message.

Independently verify every wire transfer.

Before sending money, call your title company, closing agent or lender using a phone number you obtained independently or established earlier in the transaction. Confirm:

• The recipient name.
• The receiving financial institution.
• The account number and routing number.
• The exact payment amount.
• The purpose of the payment.

Never rely on an incoming message alone.

Do not verify payment instructions by replying to the same email or text message that provided them. If the account or conversation has been compromised, your response may go directly to the fraudster.

Avoid calling phone numbers included in an unexpected email, text message or attachment. Instead, use a number from a trusted source, such as your original closing documents or the organization’s official website.

Be cautious with last-minute changes.

Legitimate changes may occur, but every change should be independently confirmed before money is sent. Pause the transaction if:

• Wiring instructions change.
• The receiving account belongs to an unfamiliar individual or business.
• You are asked to divide a payment among multiple accounts.
• The requested payment method changes unexpectedly.
• Someone discourages you from confirming the instructions.

Protect your email and online accounts.

• Use strong, unique passwords.
• Enable multifactor authentication when available.
• Keep devices, browsers and security software updated.
• Review the full sender email address, particularly when viewing a message on a mobile device.
• Do not send sensitive financial information through unsecured email.
• Monitor financial accounts and report unfamiliar activity promptly.

What to do if you suspect mortgage wire fraud

If you received fraudulent instructions but have not sent money

1. Do not respond to the message, click its links or open its attachments.
2. Contact your lender, closing agent, title company or real estate professional using trusted contact information.
3. Tell the organization that someone may be impersonating it or using information about your transaction.
4. Change potentially compromised passwords and enable multifactor authentication.
5. Continue the transaction only after independently confirming the correct instructions.

If you sent money to a fraudulent account

1. Contact your bank or wire transfer provider immediately. Report that the transfer was induced by fraud and request an urgent wire recall or reversal. Ask what additional information or documentation is needed.
2. Notify the other parties involved in the transaction. Contact your lender, closing agent, title company and real estate professional through independently verified channels.
3. Contact local law enforcement. Ask how to file a police report and retain a copy for your records.
4. File a detailed report with the FBI. Report the incident through the FBI Internet Crime Complaint Center and include available transaction, recipient bank and communication information.
5. Report the fraud to the Federal Trade Commission. Submit a report through ReportFraud.ftc.gov.
6. Preserve the evidence. Save emails, text messages, phone numbers, voicemail messages, payment instructions, account details, receipts and other relevant records.

Reporting the fraud as soon as possible can improve the chances of recovering your money, although recovery is not guaranteed.

Watch for follow-up recovery scams.

After a financial fraud incident, criminals may pose as law enforcement agencies, attorneys, investigators or recovery services and promise to recover stolen money in exchange for a fee or additional personal information.

Be cautious of anyone who contacts you unexpectedly and claims they can recover your funds. Independently verify the organization before providing personal information or making another payment.

Protect your money by slowing down.

A legitimate closing professional should understand why you want to confirm payment instructions before sending a large wire transfer.

If something changes unexpectedly or does not feel right, pause the transaction. Contact a trusted representative using information you independently verified, confirm every payment detail and proceed only when you are confident the instructions are legitimate.

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