Wire Fraud & Fraudulent Mortgage Payoffs - Our Newest Pandemic!

Red flags to look for:

• Updated payoff letters:  if you receive an updated payoff and you did not request it, be very very suspicious.
  • Very carefully compare the updated letter to the original one you received.  Compare loan numbers, account numbers, routing numbers, account owner names.
  • Look at the information about the sender of the updated payoff:  if it came via fax, look at the time stamp and the time ZONE - one of our fraudulent payoffs was sent from the GMT time zone.  This is a reference to Greenwich Mean Time - a clear indication that this was not sent domestically.  If it came to you via email, hover your mouse over the email that looks right; you will see whether the email showing was spoofed.  Or "reply" to the email and hover over the addressee to see if the name is the same or not……DON'T HIT SEND!!!!!
  • Verify information as if your business depends on (because it might!).  Verify the wire instructions by doing everything you can to TALK TO SOMEONE LEGIT AT THE LENDER to confirm the wire instructions.  Document your efforts and with whom you spoke.  Ask that person to explain why an updated payoff was sent.
  • Call the seller and ask if they requested an updated payoff letter.
• Original payoff letter:  if there is no updated payoff and you will be relying on the original payoff letter, you should:
  • Verify with a high level of assurance/confidence with someone legit at the lender:
    • Wire instructions - account number, routing number, name on account, the bank it is being sent to, etc.
  • Do the above even if you were the one who requested the payoff and received it.  You could have been hacked.  Don't assume that the lender's automated system through a phone call has not somehow been hacked.  Verify.
• If you get an unsolicited payoff in connection with a closing, i.e., one you did not order/request, be very suspicious.  Go through all of the due diligence I have outlined - ask the seller if they requested it, talk to a legitimate person at the lender to verify information, etc.
   
• Do not allow anyone to order the payoff other than you as the title agent.  You should control this process.  I realize that this can create conflict from time to time with seller attorneys but you need to work through this.  Going through the verification process with the legitimate person at the lender is extremely important in these situations.
   
• If you don't feel comfortable with the situation at all, send the payoff by check even if you have to go to the trouble and expense to get a cashier's check.  Ha!  Take that, fraudster!

Bottom line:  you can do all of the above and still get scammed but you will significantly reduce the risk.   And because you will be the one held ultimately responsible for making sure the right loan is paid off, you need to do everything you can to reduce risk.

Please email with questions or comments.  mmurphy@thefund.com

Let me know how we can help you.

Melissa Jay Murphy
Executive Vice President, Chief Legal Officer,
and General Counsel