When you buy a home, there are three main parties who bring you through the process from contract to closing. One is obviously your agent. The second is your loan officer. They help you get the mortgage so you can buy the home. The third is the Title Company.
Well shoot, who’s that?
Most buyers are active in their search to hire an agent and loan officer. But hardly anyone ever knows who the Title Company is or how they play into the process. (Title Company, Settlement Agent and Escrow Agent are used interchangeably but they all refer to the same company.) They are responsible for running title to the property, ensuring that the property transferred legally and correctly from person to person and preparing the closing documents and deed to transfer ownership. They also collect and disburse money to/from the appropriate parties.
In the process all this money coming and going, hackers very slyly figured out how divert some of that cash into their accounts.
For decades, when buyers paid the deposit at the time of contract, it had been customary to write a check. Since checkbooks are about as popular now as princess phones, many buyers wire their funds instead. This is where hackers figured out a pretty perfect crime.
You’re the buyer. You receive an email from someone at the title company, introducing themselves as another point of contact, with wire instructions for your deposit. You wire the money to that account. And no one at the title company ever receives it. You actually wired it to a bogus account.
How is this happening that the hacker knows exactly when to email you during the appropriate point in your transaction?
We’re an industry that has moved online. It is a common daily occurrence for an employee at a title company to receive an email that says: “Attached you will find a contract for our new transaction.” Title Company Employee clicks the link, downloads the contract and the ball is set in motion for a new transaction. Except now not every single one of those emails is a legitimate contract.
Some of those emails with attachments now contain malware links. It can be an attachment. It can be a link within the email. It can be an unsubscribe link. Whatever it is, once downloaded, that software allows the hacker to infiltrate the user’s computer at the title company and see everything on which they are currently working. Then they can spoof emails to people actively engaged in a transaction asking them to wire funds to the account info in the email.
The buyers never realize this is not a legitimate employee and they wire their money.
And then it’s gone.
Local title companies report receiving multiple requests a day to download or click suspicious links. It has become almost impossible to discern which is legitimate and which is a hacker. The emails are in perfect English, there is no clue that would raise a red flag. The recipient would have no reason to believe they are about to send their money to a place where it will never be recovered.
How can we prevent this?
Old School, baby. We’re going old school. We have to do two things we thought we may not have to do anymore.
1) Pick up the phone and have a conversation with someone. Call the Title Company and confirm the wire instructions. Do not use the phone number in the email. Google them yourself (at least I didn’t tell you to look it up in the Yellow Pages) and call the number you find for them.
2) Write a check and hand carry it to the Title Company or mail it to them.
As we take steps forward with technology there is always a pitfall to dodge. Until this is figured out, or until the hacker(s) are caught, (don’t laugh! The Nigerian Prince was caught last week!) we need to go back to the tried and true methods.
Now, go find your checkbook. It’s probably under your fax machine.