Scam Alert: Fake Title Companies Stealing Homebuyers' Payments
FBI cites $4 billion in losses due to fraud
Ric Edelman: It's Friday, January 20th. I want to talk with you about real estate. I told you about how real estate prices are falling. A lot of people who bought homes last year are now discovering that their house is suddenly worth 10% or 20% less than a year ago. If you're buying a house, not only do you have to rethink how much you're willing to pay for the house, but you also need to carefully consider how you buy it. I'm talking about the transaction itself.
You know the drill. When you sign the contract, you have to wire your earnest money. That's your down payment to the title settlement company. After two or three months after you do the inspection and the title search and you get approved for the mortgage, you go to settlement. And the day before, you have to wire the rest of the money to the settlement company. The title company sends you an email with the wire instructions and you send that info to your bank. They wire the money - hundreds of thousands of dollars, often millions of dollars. Watch out. The Secret Service says people are getting fake emails that look like they're coming from your title company. But in fact, a hacker is impersonating them once again.
Yeah. The scam is a fake email. The wiring instructions have you sending your money to the scammers, not to the real title company. If you tell your bank where to wire the money and the money goes into the pocket of a crook. Your money's gone. You have no recourse. The bank's not liable because they did what you told them to do. FDIC won't reimburse you either. Neither will your insurance company. That's half a million bucks, maybe, that you spent years accumulating. Gone in an instant, forever. You'll be sorry.
And don't think it's just one fake email you get. The hackers cultivate you for months. See, what they do is they gather contact info of lawyers and real estate agents, title companies, mortgage brokers, and then they send emails to you that look a lot like their emails. You start emailing with these people, thinking you're emailing with your actual agent or your title company and you don't realize you've been engaging with a crook. So when they send you instructions on where to wire your money, you think nothing of it.
Now, the FBI says this kind of fraud has caused over $4 billion of losses in the last two years. Real estate deals are one of the biggest areas of loss. The crooks like to target real estate deals because let's face it, the transactions are huge. How often do you wire millions of dollars? So if you're planning to buy a house, talk - I mean talk, don't email - talk with your real estate agent and the title company and the bank. Talk to them about the steps that they want you to take so that you don't lose the house of your dreams to a crook. That's a bummer of a story.