Here at Cornerstone, we can help people achieve their dreams of homeownership. So, we wanted to let you know about a mortgage closing phishing scam that’s been targeting homebuyers.
The FTC and the National Association of Realtors have both issued warnings regarding this scam.
Working with a first-time homebuyer? Help them find out how much house they prequalify for first.
For realtors: Educate buyers on fake emails that look like the real thing
Phishing is when an internet scammer impersonates a business in order to get your personal information. For this scam, hackers are breaking into consumers’ and real estate professionals’ email accounts and getting information about upcoming real estate transactions.
After finding out key dates like the closing date, the scammers send an email to the buyer posing as the real estate agent or title company. The fake email says that there have been some last-minute changes regarding closing and asks the buyer to wire money to a different account — the scammer’s account. If the buyer takes the bait, their account is wiped out. All of their hard-earned cash is most likely gone forever.
“Mortgage closing fees are typically held in a buyer’s account, and scammers know it,” Justin Lavelle, scams prevention expert for the BeenVerified online background check platform, says. “All it would take is a few minutes for thieves to clear it out, and the worst part is that the buyers aren’t likely to have any recourse to get their money back.” Lavelle explains. “Email isn’t secure, and you shouldn’t be sending or receiving financial information through that medium. If you ever receive requests for money transfers by email that you think might be legitimate, but you have questions, your best course of action is to call your lender to check on the authenticity of the request.”
We can’t stress it enough — please don’t take this scam lightly. Not only can scammers take a buyer’s money, but they can affect the closing on their new home. And if you’re a real estate agent, that can definitely hurt your business.
Here’s what you can do to help prevent this from happening to your homebuyers and to you:
Acknowledge that there is a scam out there and that it could affect you.
Announce the scam to your buyers.
Ask questions, be aware, and stay vigilant. Always call your real estate agent to confirm any changes to your transaction. If you’ve received an email with money wiring instructions, don’t respond. Remember, email is not a secure way to send financial information.
Report: If the email you receive is a phishing email, report it to the FTC.
Protect: To help protect your accounts from phishing, don’t email your financial information. And when inputting financial information on the web, make sure the URL is secure. There needs to be an S in the URL, like so: https://houseloan.com.
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Also, frequently update your passwords, be cautious when opening attachments (they may contain malware), and keep your operating system, browser, and security software up-to-date. Take the power from the scammers and follow these steps to keep yourself safe and secure throughout the homebuying process.
For buyers: Seek out a realtor who keeps your information safe
A realtor with enough industry knowledge to warn a buyer of a potential phishing scam is already on the right track. But buyers can take extra precautions by ensuring they work with a licensed agent. A licensed realtor is held to a higher standard, Terrence Boykin of Keller Williams Realty says. A realtor who is licensed will likely request to meet in their brokerage’s office. “In North Carolina as agents, we need to have the potential client sign the working real estate agent’s brochure upon the first meaningful conversation. Clients can also request to see the agent’s pocket card. North Carolina agents must have their pocket cards with them at all times; it shows their license number,” Boykin says.
We’ve got an app that helps make shopping for a house and getting prequalified easy. And our LoanFly app is totally free.
“A realtor license doesn’t provide 100 percent protection, but a LinkedIn account also doesn’t mean anything in terms of whether or not someone who claims to be a realtor is in fact one,” Lavelle adds. Do your due diligence, he says. Make sure that a realtor has a valid — not expired — license. And be aware that even in some instances where an agent is licensed, shadier dealings can still occur.
Tiffany Johnson-Wilson, president and Broker-in-Charge of Johnson & Wilson Real Estate Co., cautions buyers to end communication with agents who show signs of untrustworthy behavior:
- Reconsider an agent they charge an upfront fee to list your home instead of trusting the commission will be paid when they sell your home.
- A real estate agent who talks negatively about their competition may be in violation of a code of ethics.
- Stay wary of a real estate agent who does not provide a written offer rejection form; they may not have submitted your offer. “An offer rejection form is required by law in most states to be submitted to the buyer upon rejection. In a booming market like many are in now with multiple offers, you have to ensure your agent is truly working for you,” Johnson-Wilson says.
- An agent who promises a kickback after closing could land several parties in jail — this is against federal law.
- Research an agent met from a cold call. “I hate to say it,” Johnson-Wilson says. “But these are normally brand-new agents with little-to-no experience who will most likely not have the experience to be able to properly represent you. Or possibly, they may be another kind of real estate scammer.”
Checking up on any realtor you choose to work with — along with any financial emails you receive — is one of the simplest forms of fraud prevention.
Licensed realtors with an online presence should have reviews that indicate the quality and ethics of their service. To take it a step further, Jason Northcutt, a realtor at North Real Estate Group of Keller Williams, recommends confirming that an agent is a member of a professional association. The National Association of Realtors provides their Field Guide to Real Estate Organizations as a helpful resource.
Realtors, when your buyers are ready to start looking for the perfect house, send them our way first. We can help to safely and securely get them prequalified before house-hunting begins. An early prequalification will let a buyer know how much house they can afford. Trustworthy, friendly, reliable, and scam-free, we’re licensed to lend in 40 states.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources deemed reliable but not guaranteed.