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Criminals Have a New Target for Wire Transfer Fraud

And the Cheat Goes On...

Gregory J. Miely photo

by Gregory J. Miely, ATG Senior Underwriting Manager and Corporate Counsel

IMPORTANT: Verify Payoff Statements and Wire Transfer Instructions with the Lender before Disbursement

Just when you thought it was safe to wire transfer funds, the criminals have found a new target to hack: Lender payoff statements.

ATG attorney agents, other attorneys, closing or settlement agents, disbursement agents, escrow officers, or any other entity handling the payoff of an existing mortgage or other lien or debt as part of a real estate closing must be aware of and take precautions against falling victim to this latest fraud scheme.

Hackers are intercepting lender payoff statements, changing the account to which the payoff funds are to be wired, and sending them on to unsuspecting parties who assume the instructions are legit. Unlike the intercepted wire transfer instructions for the buyer's incoming funds, for which ATG would have no liability since it never receives the funds, if ATG wires the payoff funds to the incorrect account, ATG potentially could have liability for mishandling the funds. Therefore, it is imperative that parties verify with the lender all payoff statements and wire transfer instructions prior to the disbursement of any funds.

We urge you to follow these guidelines:

  • Apply the same precautions to transmitting the lender’s payoff statement that you use to protect the wiring of a buyer’s incoming funds.
  • Verify the lender’s Routing Transit Number (RTN) contained in the wiring instructions at the Federal Reserve’s National Information Center: https://www.ffiec.gov/nicpubweb/nicweb/SearchForm.aspx.
  • If sending a payoff statement via email, be certain the email is encrypted. (It is safe to send payoff statements via fax or regular mail.) ATG Member Agents: For more information on email encryption, see our post, Establishing a Business Domain and Email Encryption Service.
  • If the payoff statement is issued by an entity other than the mortgagee of record, the mortgagee-lender may be using a loan servicing company to handle the collection of the loan payments. Verify the loan servicer with the mortgagee-lender before making any payoff.

The world of real estate transactions has become exponentially more difficult even within just the last few years, especially due to the mixed blessings of the internet. It is imperative that real estate professionals — lenders, brokers, attorneys, and title companies — remain ever vigilant during the closing process to protect the money and property of their customers and stakeholders.

Feel free to Contact Us if you have questions or comments. We’d love to hear from you.

Posted on: Thu, 05/25/2017 - 11:03am