Summer 2021

Wire Transfer Scheme Targets Mortgage Payoffs, Secret Service Warns

By Frank Pellegrini

The U.S. Secret Service issued an advisory warning of a drastic increase in wire transfer fraud related to real estate transactions and mortgages. According to the alert, cybercriminals impersonate lenders with the intent to elicit payment of mortgage payoffs. The Secret Service said the criminals send fictitious or altered mortgage payoff statements to title companies.

The U.S. Secret Service has observed a sharp increase in fraud targeting wire transfers related to real estate sales and mortgages. Millions of mortgages are paid off each year in connection with the sale and refinancing of residential and commercial properties. Mortgage payoff statements are most often sent by mortgage lenders to title companies, who are responsible for administering payment. This fraud scheme involves the impersonation of mortgage lenders with the intent to elicit payment.

Cybercriminals send either completely fictitious or altered (changing bank account information) mortgage payoff statements to title companies. This scheme is particularly concerning due to the high value of individual wire transfers and frequently the lack of confirmation from lenders that wire transfers are received, the Secret Service said. This creates a unique challenge in discovering and recovering funds after they are transferred. The Secret Service provided the following tips to help prevent the fraud:

  • Update policies and procedures to ensure proper verification of information before releasing funds.
  • Independently obtain mortgage payoff statements and confirm with verified and trusted sources. Independently verify the authenticity of information included in correspondence and statement.
  • Do not rely on third parties, such as mortgagors or other transaction participant, for information.
  • Restrict wire transfers to known and previously verified accounts.
  • Pay using checks when the information cannot be independently verified.
  • Have a clear and detailed Incident Response Plan.

Download the full issue of ASSURANCE Summer 2021