How Title Agents Can Prevent Real Estate Fraud

Learn the common types of wire fraud, their warning signs, and how to keep your business and customers secure.

How Title Agents Can Prevent Real Estate Fraud

Learn the common types of wire fraud, their warning signs, and how to keep your business and customers secure.

Written by:

Matt Kilmartin

Read time:

6 minutes

Category:

Date:

Apr 27, 2022

We’ve become so accustomed to the simplicity and quickness of texting and email that sometimes it is easy to forget the limits of these technologies, especially when factors such as security really count.

While these digital technologies have come a long way in helping to keep people connected, criminals have also found weaknesses in these tools to commit real estate fraud. In fact, according to an FBI report, 11,578 people fell victim to wire fraud involving real estate or rentals in 2021, resulting in more than $350 million in losses.

It is trends like these that make it even more important for title agents to know the signs of real estate fraud and understand the necessary steps they need to take to protect themselves and their customers.

Three Types of Real Estate Fraud

There are three main types of real estate fraud that all real estate professionals should be aware of so they can watch for the signs that may indicate that their transactions are at risk. 

These are:

1. Mortgage Fraud 

While it can take several forms, mortgage fraud typically involves a person intentionally making false statements or stating positions on applications or legal documentation to obtain a mortgage loan or initial an ownership transfer of a property.

2. Home Title Fraud

Home title fraud occurs when a criminal obtains the title of a home—usually by stealing an identity—to change ownership of a property. Once they have the necessary documentation, the criminals then take out a home equity loan against the value of the home. 

Because of the nature of this type of fraud, the real homeowner often is completely unaware of the fraud until the lender begins to send letters indicating that they are past due on payments, which could lead to foreclosure on the property.

3. Wire Transfer Fraud

Wire fraud typically begins with a form of business email compromise (BEC). BEC involves a criminal either spoofing an email account that looks similar to a legitimate real estate professional or gaining unauthorized access to an email account and intercepting and altering the real communications between the parties. Upon doing so, the criminal compels a victim to wire money to what they believe is a legitimate bank account during the closing, but it is actually an account indirectly or directly controlled by the criminal. 

Unfortunately, according to one survey, nearly 71 percent of the stolen funds were unable to be fully recovered from real estate fraud schemes like these. While this form of fraud seems complex, that same survey found that 76 percent of title agents reported wire fraud attempts or have noticed an increase in the last two years.

How Title Agents Can Fight Back with Real Estate Fraud Prevention

While criminals have become increasingly sophisticated with their abuse of legitimate digital platforms and processes, title agents and their teams still have plenty of tools at their disposal to protect their and their customers’ interests.

Some key practices include:

Boosting Your Cybersecurity Awareness

Make sure that your team and your customers know the signs of phishing scams. As these approaches get more sophisticated, fraudulent email messages can appear legitimate but still usually have warning signs such as:

  • Misspellings of key information, such as names, businesses, and addresses
  • Sudden changes in voice or tone of the messages, especially invoking a sense of urgency
  • A change in the next steps or instructions that the customer is supposed to follow
  • Unusual attachments or links

To further strengthen security, ensure that your computer operating systems, antivirus software, and browser are current and that you discuss any key communications ahead of time with customers.

Having a Trusted and Documented Workflow

As title agents juggle multiple transactions and closings at once, it can be tempting to bypass certain standards, steps, or protocols to save time or because of long-standing relationships with other real estate or financial professionals.

To help ensure transactions are handled consistently and securely, title agents should create specific and consistent workflows for team members to follow, including specific wire instructions that customers should follow. This includes confirming the identity of even trusted parties.

Having secure wiring instructions helps limit agent liability, lower the risk of potential lawsuits that could result in high financial and reputational costs, and help to flag potential issues of processes that fall out of the normal pattern. 

Using Industry-Leading Tools to Minimize the Risk of Real Estate Fraud

A newer, stronger weapon in the fight against real estate fraud is the introduction of encrypted identity verification platforms. 

For example, CertifID creates an end-to-end, encrypted tunnel used during the account information collection process that begins with identity verification before key data is shared. 

When used in addition to other security controls, CertifID can help to limit agent liability and lower the risk of potential lawsuits that could result in high financial and reputational costs.

Fight Back Against Real Estate Fraud

Like any other criminal, those looking to commit any of these real estate frauds are looking for an easy win and a big payday.

And just as a thief would be hesitant to break into a home or business equipped with alarms, security cameras, and locks, your can protect your title company, give customers peace of mind, and secure the wire transfer process by taking these necessary security steps and leveraging the power of CertifID

Want to take your business’s wire fraud security to the next level? Then make sure to also check out our other resources, including our guide, Cybersecurity Measures You Can Implement To Protect Your Real Estate Business.

Matt Kilmartin

VP of Sales

Matt has over a decade of experience bringing disruptive Software-as-a-Service (SaaS) solutions to market in the automotive, MarTech, and real estate industries. He excels in high-growth tech companies with a passion for building and leading sales teams that deliver a memorable, consultative experience to prospective clients.

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