Evolving real estate scams – vigilance needed

Last year, an old wire transfer scam evolved to target Realtors® and their clients. A December 15th “Alert” put out by the National Association of Realtors® (realtor.org) reminded NAR members and consumers to be vigilant. “The hackers often send an email that appears to be from an individual legitimately involved in the transaction, informing the recipient, often the buyer, that there has been a last minute change to the wiring instructions.  Following the new instructions, the recipient will wire funds directly to the hacker’s account, which will be cleared out in a matter of minutes. The money is almost always lost forever.”

real estate
From nar.realtor

NAR offers guidance and “best practices” to prevent being a victim of scams and cybercrime. Even though your agent should be mindful and exercise caution, you should take the initiative to protect yourself. You should be attentive and alert to the possibility of email scams by: not sending sensitive information via email; never trust unverified email; you should not interact with suspicious emails; clean your email regularly; do not conduct business over free WiFi hotspots; and use strong passwords that are changed regularly.

NAR stipulates that the guidance is “not all-inclusive,” and you should check with your agent about their office’s cybersecurity policy. The warning states that the scammer emails are “extremely convincing,” such that “many sophisticated parties have been duped.” No one is “too small” to target, and don’t be over confident about being tech savvy. “This fraud is pervasive, convincing, and constantly evolving.

According to an August 28th report issued by the Federal Bureau of Investigation (Business E-Mail Compromise, An Emerging Global Threat; fbi.gov) BEC (Business E-Mail Compromise) is an insidious scam that is not only targeting real estate, but all businesses and consumers. According to FBI Special Agent Maxwell Marker (of the FBI’s Transnational Organized Crime–Eastern Hemisphere Section in the Criminal Investigative Division), “BEC is a serious threat on a global scale…It’s a prime example of organized crime groups engaging in large-scale, computer-enabled fraud, and the losses are staggering.”

BEC statistics compiled by the FBI’s Internet Crime Complaint Center (ic3.gov), from October 2013 to August 2015 reported 8,179 total victims (U.S. and non-U.S.) and $798,897,959.25 combined U.S. and non-U.S. exposed dollar loss. The IC3 has reported that computer intrusions related to BEC are on the rise; and can be initiated via a phishing scam that downloads malware that can access the victim’s data, passwords, and financial information.

Multiple versions of the scam are being implemented, and it’s likely that the tactics will change as cybersecurity catches up with the scammers. The most recent version identified by the IC3 has fraudsters claiming to be a law firm handling confidential information (including real estate transactions). The scammer may use email and/or telephone to contact potential victims, who are pressured to act quickly at the end of the business day.

To learn more about BEC, protection strategies and how file a complaint – visit the Internet Crime Complaint Center (ic3.gov). If you are a victim of BEC, the IC3 recommends that you: contact your financial institution immediately; request that your financial institution contact the corresponding financial institution where the fraudulent transfer was sent; contact your local FBI office (if the wire is recent, the US Department of Treasury Financial Crimes Enforcement Network might be able to help return or freeze the funds); and, regardless of dollar loss, file a complaint with the IC3.

By Dan Krell
Copyright © 2016

If you like this post, do not copy; instead please:
reference the article,
like it at facebook
or re-tweet.

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Have you unknowingly perpetrated Mortgage Fraud?

You’ve probably read a few recent articles featuring victims of the mortgage crisis. Many of these home owners claimed to have been duped into obtaining loans that they could not afford. One recent article described how the home owner went along with a plan to obtain a mortgage that involved using someone else’s credit as well as artificially inflating their bank account to qualify. Is the home owner guilty of mortgage fraud if she knowingly follows the scheme of their real estate agent and/or mortgage broker to deceive the lender to qualify for a mortgage?

Among the many crime reports published by the Federal Bureau of Investigation (FBI) is the Mortgage Fraud Report. According to the 2006 Mortgage Fraud Report (https://www.fbi.gov/stats-services/publications/mortgage-fraud-2006) mortgage fraud is defined as “the intentional misstatement, misrepresentation, or omission by an applicant or other interested parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan.” As the Maryland and Virginia areas are described as being significantly affected by mortgage fraud, the FBI cited recent increases of mortgage fraud are due to many perpetrators of fraud who have taken advantage of recent lenient credit standards.

The FBI divides mortgage fraud into two categories, fraud-for-profit and fraud-for-property. Fraud-for-profit typically involves schemes or scams for financial gain. According to the FBI, fraud-for-profit schemes (also referred to as “industry insider fraud”) often involves artificially inflating property values, obtaining loans on non-existent properties, or “revolve equity.” Illegal flipping schemes that commonly use straw buyers and fraudulent appraisals are examples of fraud-for-profit.

Fraud-for-property, however, is the misrepresentation by a borrower so as to obtain a loan to purchase a home. Fraud-for-housing increased in recent years due to the rise of home prices; applicants would provide misleading or false employment, income, and asset information to the lender to qualify for the loan. Although the intent of the borrower is to repay the loan, this activity is still illegal and can lead to Federal prosecution.

To avoid becoming involved in a mortgage fraud scheme, the FBI provides these tips: If it sounds too good to be true, it probably is; Get referral for real estate and mortgage professionals and check the licenses with regulatory agencies; Be wary of strangers and unsolicited contacts, as well as high-pressure sales techniques; Look at written information to verify the value of the property; Understand what you are signing and agreeing to – If you do not understand, seek assistance from an attorney; Make sure the name on your application matches the name on your identification; Review the title history to determine if the property has been “flipped” and the value falsely inflated; Know and understand the terms of your mortgage (Check your information against the information in the loan documents to ensure they are accurate and complete); Never sign any loan documents that contain blanks as this leaves you vulnerable to fraud.

Mortgage fraud is not a victimless crime. Besides foreclosed upon borrowers and mortgage entities, other victims include legitimate borrowers and those living in neighborhoods affected by mortgage fraud.

Original published at https://dankrell.com/blog/2008/03/25/have-you-unknowingly-perpetrated-mortgage-fraud/

By Dan Krell

This article is not intended to provide nor should it be relied upon for legal and financial advice. Copyright © 2008 Dan Krell.