Outrageous New Form of Real Estate Fraud Hits
A new real estate scam is invading the industry, and it has the potential to completely bankrupt many sellers, buyers, and even real estate businesses.
There are many types of mortgage and real estate scams out there. Consumers, businesses, lenders, regulators, law enforcement, the FBI are well aware of most of these. That means defenses are up, nets are in place to catch them, and perpetrators are often caught, even if it is sometimes after the fact.
The biggest danger comes from unexpected angles and from criminals who are extremely hard to stop and lock up.
We recently had a transaction in which the seller was due to be walking away with close to $1M. The day before the closing, we received an email asking if we would be able to wire the funds when we closed. The client was recommended to bring the account details to the closing, and advised we would handle it then. The deal was closed the next day. As if common we had to wait a few hours for funding as the buyers were closing in a different time zone.
A few hours later she emailed again. This time stating she had an issue with the account provided, and would like the funds wired to another account. Shortly after we received information for a Bank of America account (she used a local bank), and the payee was an LLC.
We decided to verify, just in case. And especially given this amount of money. When she answered the phone, she had no idea what was we were talking about. She only uses the local bank, she does not have an LLC, and she never sent any emails about wires. Obviously, we both freaked out.
We reviewed the emails which obviously appeared to be sent by her. Then noticed her email address had been spoofed. Whomever set up the account replaced an “I” with an “L.” When lower-case, you can easily miss the difference. They also set up an email signature referencing her current address (which was not the property).
Whether she had been caught in a phishing scam or directly hacked is unclear. Our IT contractors reviewed everything and found no evidence of a breach on our end.
On further investigation it was found that the Bank of America account in question was a legitimate, establish account, with no suspicious activity. It is now assumed that account has also been compromised. It has been flagged and is being monitored, but that is the extent of what the authorities have been able to do, so far.
Of course; effective immediately, we have required everyone to follow up any emailed wiring instructions with a call (regardless of who the party is). We have also advised agents to make sure their clients ALWAYS call before sending their funds. One quick call in this case saved almost $1 million, not to mention the reputations and solvency of the other professionals and companies involved in the transaction.
Unfortunately this is not an isolated situation, and other forms of this real estate scam can be even more difficult to detect.
Next week we’ll dive into how to prevent various forms of this scam, and then how to watch out for title insurance companies which may be involved in this type of fraud as well…Don’t miss it!
