Shielding Your Funds: How to Avoid Escrow Deposit Fraud in Real Estate Closings
Download MP3 Description:
- Escrow Fraud and How to Prevent It:
- New Home Buyers at Risk: Hundreds of thousands of first-time homebuyers are entering the real estate market, many unaware of the risks, particularly escrow fraud, which can result in losing your life savings.
- How Escrow Fraud Works: Cybercriminals hack unsecured emails to intercept real estate transactions, posing as legitimate representatives from title companies or banks. These scammers provide fake wiring instructions to buyers, leading them to send funds to fraudulent accounts.
- The Mechanics of Home Buying: When purchasing a home, buyers must wire a down payment to the escrow company, which is responsible for holding the funds until closing. Scammers can impersonate title companies to divert this payment.
- Risks of Wire Transfers: Unlike checks or cashier’s checks, wire transfers can't be stopped or reversed once completed, making them a prime target for fraud.
- How to Prevent Escrow Fraud:
- Verify Wiring Instructions: Always verify wiring instructions directly with the title company. Don’t rely on emails—call the company’s official phone number or visit in person.
- In-Person Verification: When wiring a large sum, such as a down payment, go to your bank in person to ensure the account information is correct.
- Test with a Small Transfer: Before wiring the full amount, send a small test amount (e.g., 85 cents) to verify the account is legitimate.
- Confirmation: Call the title company to confirm they received the test transfer and that the account information is correct.
- Double-Check at Your Bank: If possible, get a printout from your bank confirming the wire transfer before proceeding with the full amount.
- Why It’s Worth the Extra Effort: Taking a little extra time to verify the details could save you from losing your life savings and the house you’re trying to buy. Even though it might feel like an inconvenience, the potential cost of falling victim to this fraud is far higher.
- Real-Life Consequences: Many homebuyers have lost hundreds of thousands of dollars in these scams, with no recourse to recover the money. Protect your investment by following these simple precautions.
- Closing Thoughts: Buying a house is one of the most important financial decisions in your life. Ensure that you take the necessary steps to protect your money and avoid falling victim to escrow fraud.
