The Expert Podcast

…For over 10 years we've seen many examples of different types of deed fraud on real estate transactions, which. Can destroy the finances of a buyer or seller. And you know really kind of take away all of the harder and money that you have And here's how deed fraud works. Anytime there's a real estate transaction. What can happen is as the money is being transferred back and forth almost all the time There's various wire transfers in any real estate closing or settlement. There's multiple transfers of funds, right The buyer transfers their down payment to the title company. The title company transfers page. to the seller. Maybe the mortgage company of the seller. Maybe the real estate commissions for the brokers, the new buyer has a mortgage that transfers money into the title company. And all those transfers. Are at risk of being stolen. And the way it's done is. Cyber thieves and criminals will find out about a real estate sale Sometimes there'll be stalking. Zillow or Redfin or other real estate sites. When they see a house that's for sale and then goes pending, they'll start sending out messages to try to intercept communications between buyers sellers brokers. and lenders and mortgage companies. And what they'll do is they'll give instructions to wire money to a different place And that's what happened to the people in this story where they lost $160,000. And that may seem like a lot of money but it's one of the lowest amounts of deed frauds we've seen So how does this work? What happened is the title company was hacked by an expert hacker. And the seller. Didn't get their $163,000 It was supposed to pay off their mortgage. The seller sold their house, but their mortgage never got paid off And what what happened is the, the hacker. Change the account number on the payoff statement. To an incorrect number. And it was not the number of the mortgage company of the seller. Somewhere in an email, the account numbers were changed. The account number now went and sent this money. To someone else It was sent to JP Morgan chase bank somebodies account number, and the account number where the money was deposited was a property management company. And that account was owned by a person who is the business owner and lives in the same town. That person was arrested but they're claiming that they were hacked either way. When you change account numbers on wiring instructions you can actually have money sent to the wrong place and because real estate. Is the most expensive type of transaction. There are many times when. Transfers on real estate Closings can be hundreds of thousands of dollars. And. If you divert one of those payments to the wrong account. You get the money. So how do you prevent yourself from being a victim of that Well it's real simple. All you need to do is perform a test transaction So if you're a buyer. And you're wiring your money to the title company for your down payment Maybe your wiring. You know if you're buying a $500,000 house and you're putting down 20% that's a hundred thousand dollars your wiring. So before you just send out a Hey. thousand dollars of a wire transfer to the title company, get their wiring instructions that they'll give you normally by email, maybe in person in a on a piece of paper and go to your bank. And send a wire transfer for a very small amount, $10 $20 a hundred dollars whatever it is. And. Then confirm with the recipient the actual recipient with that title company. That they received that wire transfer Now you know that that's the right actual account number. And then when you are ready to transfer the real balance the a hundred thousand dollars go back to the bank. And tell him to wire it to. the same exact number that they use before. Do a repeat transaction So that way you know there's not going to be any errors in the numbers You didn't write it down wrong or somebody else swapped numbers on you. And that way you will know that the money's going to the place it's supposed to because that test transaction. Put the money into the right account at the title company and title companies can do the same thing. They can do a test transaction for a mortgage payoff for commission payments or whatever the case may be. And that way they're not putting their money at risk and they don't have to worry about losses from title fraud or deed fraud. So it's a real simple thing to prevent. It does take a little bit of. effort a little bit annoying to have to go to the bank twice. You probably have to pay an extra fee for that wire transfer It might be 10 or $15. But to protect yourself against loss of six figures or more, it's probably worth it to do that one test transaction make sure they got the money and make sure you're communicating with the actual title company. A lot of these hackers will. Intercept emails and pretend to be the title company. So contacting them by phone making sure you look up the right phone number or go in person to the title company and ask them if they received that transfer. So you know that all the money goes to the right place and you're not going to be out your life savings.