Holiday Fraud

By: Allison Kalweit, Underwriting Counsel

As the holidays approach, so does the risk of wire fraud. Criminals are aware of our industries’ busy schedules, including trying to close deals before holiday bank closures. The fraudsters take advantage of that vulnerability to execute their scams.

Unencumbered vacant land remains the biggest target for scammers. As a result, First American has complied questions every agent can ask to help protect against allowing a fraudulent transaction to close.

The first question should be determining the type of property involved in the transaction. Is the property improved or unimproved? Does anyone currently occupy the property? Is there a mortgage? How long has the current owner owned the property?

The next focus should be on the seller. You should determine as much about the seller as possible. This includes whether they are a citizen or resident of the U.S. and where the seller is located.

Your biggest ally in fighting fraud is the source of referral, such as a reliable real estate agent or attorney. The best-case scenario is that the realtor or attorney has met and known the seller for many years. However, that is not usually the case. If no one has met the seller, you should determine how the seller has been communicating. Getting the seller on the phone is always preferred when the transaction is suspicious.

Because the fraudsters are sending out thousands of scams at once, they do not spend much time reviewing spelling or grammar. Some key phrases that are often found in fraudulent emails are: kindly, words indicating friendship, risk words, negative words, and mention of God.

Last-minute changes in wiring instructions are also a major concern. Look for any recent changes in instructions that differ from a previous instruction. Especially look out for payoff amounts that differ from the original or do not match the calculation. The receiving bank should match the payoff statement bank. You can often tell if an email or document has been edited if there are inconsistencies in font types and sizes.

The last red flag to be aware of is if it is a rush request or a sense of urgency. Although not every rush order is fraudulent, combined with the factors above, it can indicate a suspicious transaction.

If you encounter a situation where you believe fraud could be at play, review First American Underwriting Communication NA-2023-005 and reach out to your First American Underwriters for guidance.