Tactic to prevent wire fraud in real estate closing?

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59Gibson
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Tactic to prevent wire fraud in real estate closing?

Post by 59Gibson »

Has anyone ever sent 2 wires in one real estate transaction? Send a small test amount maybe a few days before settlement( have Title co verify amt) then send 2nd larger amount.. I understand this would be incurring double wire fees. Overkill or fool-proof solution in preventing fraud?
barnaclebob
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Re: Tactic to prevent wire fraud in real estate closing?

Post by barnaclebob »

Overkill. The scam is when you recieve an email that spoofs your closing agents email address with new wire instructions.

Just ask the closing agent how they will send the wire information, then call them to verify it before you send. I think your bank should also have you give them the name of the recieving bank or some more information. Im pretty sure you just dont give an account number.
SlowMovingInvestor
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Re: Tactic to prevent wire fraud in real estate closing?

Post by SlowMovingInvestor »

Whenever I send a wire anywhere, I always try a small wire first, even if the other account is mine.

I do happen to have free wire services at a number of FIs, so sending a test wire doesn't cost me anything.
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RickBoglehead
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Re: Tactic to prevent wire fraud in real estate closing?

Post by RickBoglehead »

Overkill. Wire information can be confirmed over the phone if you're paranoid.
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Nate79
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Nate79 »

Way overkill.
schwank
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Re: Tactic to prevent wire fraud in real estate closing?

Post by schwank »

Agreed that's overkill. When I sent the initial payment for our new construction (over 250k) they emailed the account numbers and then I called to personally verify with someone I had previously worked with at the bank. I will say I read those numbers back about 20 times before I clicked the button to send the money though!
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Re: Tactic to prevent wire fraud in real estate closing?

Post by IMO »

The scary thing is wire transfers once done are apparently final. Last time I went through this I know that was a scary thought, I mess up the form/numbers and the funds go to some anonymous person who now takes ownership of the funds, legal or not legal. So the wire transfer directions don't match the specific fill in boxes for the bank. That's stressful, but think I get that cleared up with the help of the bank. Then you fill in the boxes with the account numbers. Oddly, unlike a password set-up, there is no 2nd box to confirm the numbers. So that's stressful. You then put in the extra information in the memo regarding the property address as you are hoping that somehow someone is on the other end, verifying the funds are going to the right account. Hoping .... that's stressful. Then I'm thinking, what if the bank person accidently type in the wrong number on the account or didn't put on their readers?

Then it happens, the wire funds transfer but get returned. Turns out I messed up, missed a number on one of the many boxes for the account. Must have not put on the readers. :oops: Thankfully the financial institution is small and very personable (even though this is all being done on-line and on the phone and not in person) and they help figure out what went wrong and correct the single error. I'm thinking what if this was a huge bank with possibly employees not taking full responsibility, or maybe they are working at home and the kid is distracting them :confused

The fee for the transfer of a large sum of money was just $15 I think. Would it be worth it to sacrifice an extra $15 to do a test wire, make sure it every thing went through to the escrow company without a hitch and for peace of mind?

I suppose in hindsight, an extra $15 to do a test wire transfer wouldn't be a horrible thought. I wasn't even thinking about fraud issues.

Now it all would have been better if I could have done it cheaper than the $15 via a bitcoin transaction instead that is marketed as being 100% irreversible. That's comforting. :D
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Re: Tactic to prevent wire fraud in real estate closing?

Post by CoralReef »

I called the receiving bank to verify that the account name was that of the title company. Initially they did not want to give any information, until I stressed that I was not asking to verify funds, only to confirm that the name matched. They did verify that the name was the same, which gave me some peace of mind. Under PATRIOT ACT and AML regulations, it would be not impossible, but rather difficult for a scammer to open a bank account in a title company’s name.

Your approach is also a good one. Once a wire is sent, it is very difficult, and often impossible, to recover the funds.
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Northern Flicker »

If the escrow company is local, you could just take a hard copy money order to them.
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ShadowHusky
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Re: Tactic to prevent wire fraud in real estate closing?

Post by ShadowHusky »

I've always been curious -- how do scammers suddenly find out you are in escrow and reach out to try to scam you?
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Northern Flicker »

The scam is that they compromise an email account, say of a real estate broker or mortgage broker, then when they see in that email stream that a transaction is scheduled to close, they send an email from the compromised account with fake routing and account numbers for the ACH. The problem with clawing back the funds is that by the time you know there is an issue, the funds will have been moved offshore to a country with weak legal protections.
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Ocean77
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Ocean77 »

For the last home we bought, I picked up a cashier's check at my bank and hand-carried it across the street to the title company.
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Re: Tactic to prevent wire fraud in real estate closing?

Post by toast0 »

When we bought our most recent house, we did a wire for earnest money, and a wire for the purchase, and both went into the same account, so that sort of implemented your test wire plan. I think we ended up doing a third wire for a couple hundred to cover some things that were either not included in the estimated closing or were unknown and had to wait.

For our previous house, I don't remember if we were able to do a personal check for earnest money, but I think we did a cashier's check for the down payment at closing; plus whatever the lender did.
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Harry Livermore
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Harry Livermore »

Put me in the camp of paper checks.
I have closed on 3 properties in my life and each time brought a paper cashier's check. Including our vacation property that I bought for cash.
Wires are one of those opaque, old fashioned, pre-computer methods of payment meant to make something "easier". I prefer to look the lawyer or title company closer in the eye, shake hands, sign the paper, and hand over a check. In person. That's just me.
I have accepted incoming wires when I sell a piece of business equipment.
OP, I think it may be "overkill" but it's a great idea and worth the $15 as "insurance".
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arsenalfan
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Re: Tactic to prevent wire fraud in real estate closing?

Post by arsenalfan »

Have bought many properties.
Lately have had to call/verify wire instructions directly with office.
My bank saves wire transfer info/lets me edit the name in the online banking interface.
Like the previous poster, Earnest Money Deposit acts as the test deposit. Once that goes through, all I have to do is click on the saved info to send the larger closing amount.
DarkHelmetII
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Re: Tactic to prevent wire fraud in real estate closing?

Post by DarkHelmetII »

What scams does the seller need to be aware of in the case of a real estate closing? Maybe none / lower risk relative to the buyer which is the party ponying up cash.
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CenTexan
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Re: Tactic to prevent wire fraud in real estate closing?

Post by CenTexan »

59Gibson wrote: Fri May 14, 2021 4:24 pm Has anyone ever sent 2 wires in one real estate transaction? Send a small test amount maybe a few days before settlement( have Title co verify amt) then send 2nd larger amount.. I understand this would be incurring double wire fees. Overkill or fool-proof solution in preventing fraud?
This is exactly what I did. Good choice. I also called the receiving office to verify the account wiring info before sending the first one. They were very understanding of my wariness.

PS - Also had lots of trouble with Vanguard to send the wire/money. The transaction barely was completed in time. First Vanguard rep gave me incorrect information about which account the $s needed to be in in order to wire it out. I would say double and triple check!
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Marmot »

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Marmot
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Marmot »

Northern Flicker wrote: Sat May 15, 2021 12:40 am The scam is that they compromise an email account, say of a real estate broker or mortgage broker, then when they see in that email stream that a transaction is scheduled to close, they send an email from the compromised account with fake routing and account numbers for the ACH. The problem with clawing back the funds is that by the time you know there is an issue, the funds will have been moved offshore to a country with weak legal protections.
This situation almost happened to us. They had all of the escrow info and the same email of the title person except it was .yahoo and not .com. It was so subtle. This was a 500k deal with lots of moving parts. The scammers real problem was they sent it too early. They targeted the money to go to a credit union in Baltimore, we are in Arizona. Looking back it is easy to see, but during the moment not so easy.
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Astronaut4
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Astronaut4 »

Our closing attorney’s trust account is with the very same bank we use. Is a wire necessary? Can the bank just transfer funds? Does this lessen the fraud potential? All questions for my banker but thought I would ask here as well.
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Re: Tactic to prevent wire fraud in real estate closing?

Post by singledigit12b »

CoralReef wrote: Fri May 14, 2021 10:01 pm I called the receiving bank to verify that the account name was that of the title company. Initially they did not want to give any information, until I stressed that I was not asking to verify funds, only to confirm that the name matched. They did verify that the name was the same, which gave me some peace of mind. Under PATRIOT ACT and AML regulations, it would be not impossible, but rather difficult for a scammer to open a bank account in a title company’s name.

Your approach is also a good one. Once a wire is sent, it is very difficult, and often impossible, to recover the funds.
This is exactly what I did. Called the receiving bank. They had me read the account and routing numbers and verified the account holders name. I also wired the deposit to the same account using a different account so I was being a bit paranoid. I would much rather use a certified check.
mrsmitt
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Re: Tactic to prevent wire fraud in real estate closing?

Post by mrsmitt »

Can you share the name of the financial institution that offers you a free wire service?

SlowMovingInvestor wrote: Fri May 14, 2021 5:06 pm Whenever I send a wire anywhere, I always try a small wire first, even if the other account is mine.

I do happen to have free wire services at a number of FIs, so sending a test wire doesn't cost me anything.
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59Gibson
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Re: Tactic to prevent wire fraud in real estate closing?

Post by 59Gibson »

I called customer service to confirm ownership of the account I was given by title co, thought it would be simple due to the fact it's the same bank I'm with, but no dice. Privacy laws- was only looking for a yes they're the owner of the acct.
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Nowizard »

Ask the source of the funds to send a small amount to your bank and verify. If you have not set up that function, the source (Vanguard does I know) will send several, small amounts your bank to verify the set-up. Once done, arrange the data to enter for the transaction after talking with the closing agency. Go to it to ask them how they secure the transaction, make it and verify it was received. The data provided by the closing agency will allow you to determine whether you have been switched to a fraudulent site when making the actual transaction.

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Northern Flicker
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Northern Flicker »

Even before the scam was happening, if I got an email that I knew to be authentic with account and routing numbers, I would have considered verfication with the organization in possession of the account as protection against a typo or other error in the message. The success of the scam suggests that victims were not trying to protect against that snafu either.

I once heard a talk by an attorney whose practice is the representation of credit unions. The intracacies that determine when Federal Reserve Reg E applies to wire fraud, limiting the consumer to $50 of liability per transaction, or when wire fraud is covered only by the uniform commercial code, requiring the damaged party to use law enforcement services and/or hire their own attorney to try to get the assets back, are subtle enough that I just try to steer clear of ACH other than using a bill payment feature of online banking.
Last edited by Northern Flicker on Sat May 15, 2021 2:03 pm, edited 3 times in total.
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waltman300
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Re: Tactic to prevent wire fraud in real estate closing?

Post by waltman300 »

I heard about this a while back when watching some videos online. The thing that im confused is... who is the name or company they have the money transferred to? So why can't the go track that name/company for the money back? Obviously that other party already withdrew the money but it has to be connected to a name/company. I mean you could make up a fake company name but still it goes to a person's real name though right?


So wouldn't that person name in the bank account be tracked eventually?


Is it possible for that bank account of that person to be hacked and that person has nothing to do with it?
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Northern Flicker »

Suppose the funds go from your account, to an account created by the attacker using someone else's identity, and from there to an offshore account in a country with minimal legal protections for non-citizens. What is your recourse? For one wire fraud that I read about, the funds made multiple hops in the US before moving offshore.

A good reason to freeze your credit with ChexSystem, and not just with the three large credit bureaus, is that you don't want an identity theft situation where an account created using your identity is used in such a scam or other illegal activity. It is mildly inconvenient to have to unfreeze it when opening a new bank account, but that should not be an impediment, imho.
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SlowMovingInvestor
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Re: Tactic to prevent wire fraud in real estate closing?

Post by SlowMovingInvestor »

mrsmitt wrote: Sat May 15, 2021 8:05 am Can you share the name of the financial institution that offers you a free wire service?

SlowMovingInvestor wrote: Fri May 14, 2021 5:06 pm Whenever I send a wire anywhere, I always try a small wire first, even if the other account is mine.

I do happen to have free wire services at a number of FIs, so sending a test wire doesn't cost me anything.
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Re: Tactic to prevent wire fraud in real estate closing?

Post by FIREchief »

Ocean77 wrote: Sat May 15, 2021 1:27 am For the last home we bought, I picked up a cashier's check at my bank and hand-carried it across the street to the title company.
^^^this. We did the reverse when we sold our last house. Picked up a check at the title company and deposited it in person at our local Fidelity B&M. Both our agent and the title company rep strongly supported such an approach.

That said, we've had several threads like this in the past and the consensus remains that wiring large sums of money is totally safe. I guess I'm an outlier.
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Re: Tactic to prevent wire fraud in real estate closing?

Post by IMO »

FIREchief wrote: Sat May 15, 2021 3:16 pm
Ocean77 wrote: Sat May 15, 2021 1:27 am For the last home we bought, I picked up a cashier's check at my bank and hand-carried it across the street to the title company.
^^^this. We did the reverse when we sold our last house. Picked up a check at the title company and deposited it in person at our local Fidelity B&M. Both our agent and the title company rep strongly supported such an approach.

That said, we've had several threads like this in the past and the consensus remains that wiring large sums of money is totally safe. I guess I'm an outlier.
I suspect its getting more common that people are using on-line banks that may not have local branches. Additionally, one's title/escrow company may not be located locally. I know on our recent transaction, we obtained the mortgage on-line out of state and for some reason the defaulted title/escrow company they used was not local. They just sent a notary to our house to sign closing paperwork. In hindsight, I would have been more insistent that the title/escrow be only a local office especially since there were many problems with paperwork/communication.

If I could do it over, I'd get a cashier's check and take it over personally to the title/escrow company that I'd insist was local. Would be nice to also have the mortgage originator locally to physically go over and make sure things are progressing, but I don't know if getting one's mortgage locally is that common anymore?
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Re: Tactic to prevent wire fraud in real estate closing?

Post by Northern Flicker »

I think it is still common to work with a local mortgage broker, but regardless it is customary to have a local escrow or title company to close a transaction. I would not work with an internet bank for a mortgage. If things don't happen on time, a transaction can fail.

It is not clear that wiring funds to escrow even saves any time relative to hand delivering a paper cashier's check given the anti-fraud protocols.
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Re: Tactic to prevent wire fraud in real estate closing?

Post by toast0 »

mrsmitt wrote: Sat May 15, 2021 8:05 am Can you share the name of the financial institution that offers you a free wire service?
As mentioned, Fidelity has free wires, with no balance requirement. With a $100k balance, Schwab waves wire fees three times per quarter; Vanguard waives at $1 M balance (but if timing allows, I'd ACH push from Vanguard elsewhere and wire from there; too many horror stories with Vanguard customer service, and wiring money falls under customer service in a way that ACH doesn't).
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Re: Tactic to prevent wire fraud in real estate closing?

Post by daektr »

59Gibson wrote: Fri May 14, 2021 4:24 pm Has anyone ever sent 2 wires in one real estate transaction?
I did, made me much more comfortable on a (very large $) cash house purchase. I also realized through that process that there is something nice about the bank watching out for you with an appraisal — because it was cash I skipped that part, then had a moment where I was worried the actual house might be 2000 sq ft less than advertised
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Re: Tactic to prevent wire fraud in real estate closing?

Post by mouth »

Unrelated to wiring money, I did exactly as you said OP when sending money to a tradesman using Zelle. too many horror stories about accidentally sending money to the wrong email or phone due to a typo.
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Re: Tactic to prevent wire fraud in real estate closing?

Post by mkc »

Northern Flicker wrote: Sat May 15, 2021 12:40 am The scam is that they compromise an email account, say of a real estate broker or mortgage broker, then when they see in that email stream that a transaction is scheduled to close, they send an email from the compromised account with fake routing and account numbers for the ACH.
At a recent closing, the closing agent (attorney) related there had been multiple recent incidents where this exact scenario had occurred. Their disclosure packet (hardcopy) includes a warning to NOT accept wiring instructions by e-mail.
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Re: Tactic to prevent wire fraud in real estate closing?

Post by White Coat Investor »

RickBoglehead wrote: Fri May 14, 2021 5:13 pm Overkill. Wire information can be confirmed over the phone if you're paranoid.
And is actually required by Vanguard to wire money out.
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