Real State Borrowers Face New Mortgage Scams

closing mortgage scamsWhile borrowers worry about mortgage rates they sometimes forget that real estate financing takes place in the real world – a world filled with predators and mortgage scams.

The Federal Trade Commission and the National Association of Realtors are now advising borrowers to be on the look-out for scammers who will empty your bank-account with electronic speed just before closing if they get the chance.

This is an especially big problem because buyer bank accounts are likely to have lots of cash in preparation for closing. A loss to scammers could be enormous, perhaps tens of thousands of dollars in some cases.

The scam works like this:

Hackers use phishing techniques and get access regarding real estate settlements from borrowers or real estate brokers. Then, according to the FTC, “the bogus email says there has been a last minute change to the wiring instructions, and tells the buyer to wire closing costs to a different account. But it’s the scammer’s account. If the buyer takes the bait, their bank account could be cleared out in a matter of minutes.”

The FTC warns that “if you’re buying a home and get an email with money-wiring instructions, STOP. Email is not a secure way to send financial information, and your real estate professional or title company should know that. If it’s a phishing email, report it to the FTC.”

Mortgage Scams

The problem is that scammers can be well-beyond the jurisdiction of US authorities. For instance, my books are now being reproduced overseas – apparently in Russia, judging from the URLs. For just a few dollars you can get a shiny, new PDF of a thirty-year old book that may or may not contain a virus or malware.

The FTC says borrowers should not email financial information because it’s not secure. Whether such advice is practical is unclear because tons of financial information is obviously online and will continue to be online.

Here’s what the FTC suggests:

  • Don’t email financial information. It’s not secure.
  • If you’re giving your financial information on the web, make sure the site is secure. Look for a URL that begins with https (the “s” stands for secure). And, instead of clicking a link in an email to go to an organization’s site, look up the real URL and type in the web address yourself.
  • Be cautious about opening attachments and downloading files from emails, regardless of who sent them. These files can contain malware that can weaken your computer’s security.
  • Keep your operating system, browser, and security software up to date.

Learn more about protecting yourself from phishing and what to do if your email is hacked. If you gave your information to a scammer, visit IdentityTheft.gov.

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