What do you Mean our Wire Transfer Was Rejected?

Real Estate Broker/Owner with Madeline Island Realty 50317-90

What do you Mean our Wire Transfer Was Rejected?


I was awakened by an email alert this morning that a wire transfer of closing funds by one of our clients was "rejected", apparently because someone at a Minneapolis area credit union screwed up the wire instructions.


To be fair, the system of wiring funds from one bank to another is outated and clumsy. Fees are also high and the quality of service is, well, not what it should be. We've encountered problems like this before, but nothing quite this bad has happened when a client tried to wire funds for a real estate purchase.


Here's the Byzantine road map our client encountered yesterday, and again today, in the process of wiring funds for a real estate purchase:


Step one - Funds are wired from client's Credit Union account in Minneapolis, MN

Step two - Funds arrive at "correspondent bank" (Bankers Bank of Madison, WI)

Step three - Funds are transferred to "beneficiary bank" (AbbyBank of Abbotsford, WI)

Step four - Funds are transferred to title company's Escrow account at a bank in Medford, WI


Complicated much?


That's two ABA Routing Numbers required, plus the account number for the final destination bank. Two intermediary banks were involved. The funds theoretically bounced around from Minneapolis, Minnesota to Madison (WI) to Abbotsford (WI) to Medford (WI). Four different financial institutions, in two states, were involved in the process of moving these closing funds about 220 miles.


It's bad enough that banks have gone through several years of making it easy for fraudsters to engage in cybercrimes, hacking into the wire transfer system and emailing phony "updated wire instructions" to real estate consumers. Much of that mess was avoidable, but it has taken several years and huge financial losses for the banking industry to update their own security features for the protection of their customers.


Note that I'm not blaming my title company friends at all. They're victims of a poorly-regulated system that's made matters worse for consumers. Our title company exec told us that this situation will all presumably improve in October, when the Federal Reserve gets around to improving the wire funds system. Gee, the Fed really moves fast, don't they?










Comments (4)

Li Read
Sea to Sky Premier Properties (Salt Spring) - Salt Spring Island, BC
Caring expertise...knowledge for you!

This also happens in my 'off the main centre" region.  

Apr 29, 2020 10:22 AM
Eric Kodner
Madeline Island Realty - La Pointe, WI
CRS, Madeline Island Realty, LaPointe, WI 54850 -

Li, that's too bad. It makes doing business tougher, at a tough time for all of us. And it drives our clients crazy that they have to worry about where their money is when they send a bank wire.

Apr 29, 2020 10:26 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Eric - I remember this in my own case and checked and verified all of the instructions.

Apr 29, 2020 01:47 PM
Eric Kodner
Madeline Island Realty - La Pointe, WI
CRS, Madeline Island Realty, LaPointe, WI 54850 -

All - There's something new in transferring money that will hopefully replace the outmoded "wire transfer" system that has been plaguing consumers (and banks), title company personnel, buyers and others for too long. Check out Zelle (https://www.zellepay.com/how-it-works) for a glimpse into the future of sending and receiving money!

Oct 23, 2021 10:40 AM