BUYERS ARE GETTING THEIR CLOSING FUNDS STOLEN

By
Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY
https://activerain.com/droplet/5f95

Its only getting worse - Buyers are literally handing over billions in closing funds to theives.  The warning bells have been ringing for years. Are you protected?  I wrote about this in my article YOUR EMAIL IS BEING WATCHED = YOUR CLIENTS VICTIMIZED : THE HACK STORY over two years ago.  But still the problem is getting worse. The mechanics are explained in the previous article. In that hack, the real estate agent was to blame as her computer had been unwittingly turned into a clone for the thief.

This weekend CNBC published an article Scammers Are Tricking People..... .  In the story, almost identical to the article I published in topic and method, it is pointed out that this is a variant of wire fraud that used to prey on corporations and banks.  Now the same methods are being used on consumers - homebuyers.  The typical homebuyer has no sophisticated mechanism to protect against this fraud.  They have to be advised by professionals they are working with - their real estate agent, broker, attorney, and title closing agent.

The best protection is to "know who you are dealing with".  Have you met your real estate agent?  Have you met your attorney?  Face to face meetings are not necessary - but first contact before the transaction for the closing is set up is mandatory either in person or by telephone.  Write down the telephone numbers.  This is key to preventing fraud.

The method of the theft is to take over the computer of one of the trusted advisors in the transaction that will provide to the buyer the wire instructions for the buyer funds for the purchase.  The buyer will never know it is a thief and not their real estate agent, title closer or attorney.  And the message will be sent without the purported sender even knowing someone has taken over their email account.

Typically the wire instructions for the buyer funds gets changed or in some cases never comes from the closing agent or attorney at all - it comes from the thief.  So the best way to avoid the thief is to never give the thief the opportunity to give you phony instructions by a phony email.  When you first speak to your attorney or the title closing company, ask for the wire instructions up front.  

Our closing agency, Automated Land Title Company, uses encrypted wire instructions.  That means if they go in an email to you, before you can read them you have to know the password to open the document.  That alone is not fool proof but since we only give out wire instruction passwords by telephone to our known buyer telephone number, it works.  So in the suggestion for this procedure, the buyer will get the wire instructions from us on first contact and the buyer will not be able to open the instructions except with the password we provide by telephone.  

The key is that once you get wire instructions DO NOT CHANGE THEM.  In almost every case, the thief steps into the existing transaction and changes the wire instructions.

Remember, money lost to a wire fraud thief is not going to be recovered.  So the highest degree of vigilance is required to protect yourself - whether you are a buyer, real estate agent, closing agent or attorney.

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Copyright 2018 Richard P. Zaretsky

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1615 FORUM PLACE, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ@ZARETSKYLAW.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW -  www.ZARETSKYLAW.com

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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

I've heard of this happening too Richard. Every real estate agent needs to let their clients know how dangerous this scam can be and to always verify by voice any changes received by email close to their closing date.

Sep 04, 2018 01:19 PM #1
Rainmaker
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Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Thanks Debe!

Sep 04, 2018 03:58 PM #2
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