How to Avoid Mortgage Wire Fraud

Quick Answer

You can avoid mortgage wire fraud by handling any emails informing you of last-minute changes for a wire transfer with suspicion, calling your title company or lender before you initiate the transfer, and using several other precautions.

A man and a woman sitting at home and working on home finances, stressed about potential fraud.

Mortgage wire fraud can turn a homebuyer's dream of home ownership into a nightmare, resulting in the loss of perhaps tens of thousands of dollars. Fortunately, you can avoid mortgage wire fraud by taking steps such as being suspicious of last-minute changes to a wire transfer and verifying the transfer has been completed.

What Is Mortgage Wire Fraud?

Mortgage wire fraud typically happens when a fraudster dupes a homebuyer into sending a wire transfer for closing costs to a phony bank account. By the time the homebuyer discovers the money didn't end up in the right bank account, such as one held by a title company, it may be tough to get the money back.

The National Association of Realtors describes mortgage wire fraud, also known as real estate wire fraud, as one of the most common cybercrimes in real estate in the U.S.—leading to millions of dollars in financial losses each year.

How Does Mortgage Wire Fraud Work?

When a homebuyer is closing on a home purchase or a homeowner is wrapping up a mortgage refinancing, they're normally instructed to send closing costs via a wire transfer. Oftentimes, this money goes to the title company handling the transaction. Closing costs might include:

  • Mortgage application fees
  • Escrow fees
  • Appraisal fees
  • Legal fees
  • Courier fees

Closing costs can equal roughly 2% to 5% of the loan amount. So, if you took out a $300,000 mortgage, the closing costs might total between $6,000 and $15,000.

A mortgage wire fraud scam also might involve the down payment for a home or the funds to pay off a mortgage, for instance.

Typical Mortgage Wire Fraud Scheme

Ahead of a transaction being completed, a hacker may send phishing emails that contain malware (malicious software) to title company employees, real estate agents or other real estate professionals. These emails might also be directed at a homebuyer or home seller.

When somebody clicks on a link in the phishing email, the hacker can worm their way into an email account and dig up information about pending real estate deals. This information generally includes dates when transactions are scheduled to close.

With that information in hand, the hacker can pretend to be a real estate professional, for example, and send a fraudulent email to a targeted homebuyer. Posing as someone who's part of the transaction, the fraudster then informs the unsuspecting homebuyer about a change in the wire transfer instructions and advises them to send money to a different bank account.

Once swiped, the money is typically funneled to a fraudulent U.S. bank account and quickly withdrawn via cash or check, according to the FBI. The funds then might be deposited into a second U.S. bank account or even an international account.

How to Protect Yourself From Mortgage Wire Fraud

Follow these steps to help protect yourself from mortgage wire fraud:

Be Careful With Email Attachments

Regardless of the sender, be careful about opening attachments, clicking on links in emails or downloading files from emails. Anything you download might contain malware that gives a hacker access to vital information.

Update Your Technology

Be sure your security software, web browsers and operating system are equipped with the latest updates to help prevent hacking attempts.

Nail Down Contact Information

Be sure you've got phone numbers and other contact information to confirm a wire transfer for a mortgage transaction. If you receive an email informing you that someone's phone number or other contact information has changed, call the original number to double check.

Set Up Special Codes

To beef up security, use a secret word or phrase that only you and key people, such as your real estate agent, are aware of. Don't mention the word or phrase in any emails.

Be Suspicious of Last-Minute Changes

If you get an email alerting you to last-minute changes for a wire transfer, don't respond right away. Rather, you should call a verified phone number, such as one for the title company, to confirm the wire transfer instructions.

Call Before Initiating a Wire Transfer

Before sending thousands of dollars via a wire transfer, call the title company or lender, for example, to verify the account name, account number and other details. Furthermore, ask the company carrying out the wire transfer, such as your bank, to double check the name and number of the recipient's account.

Verify the Wire Transfer

Once you've sent the money through a wire transfer, call the appropriate folks (like the title company) to make sure they received the correct amount of funds.

What to Do if You're a Victim of Mortgage Wire Fraud

If you believe you're the victim of mortgage wire fraud, make these moves as soon as possible:

  • Contact your financial institution or the wire transfer company to request that the wire transfer be reversed and that your money be refunded. You may be able to recover some or all of your money, but only if you act quickly. Keep in mind that wired funds aren't insured, and they aren't easy to get back if they've already landed in a foreign account.
  • Reach out to your real estate agent, title company and others involved in your transaction.
  • File a complaint with the FBI at

The Bottom Line

A mortgage transaction generally involves tens or even hundreds of thousands of dollars. Therefore, it's important to do everything you can to prevent mortgage wire fraud. If you do become a victim of mortgage fraud, don't delay in taking action. Acting quickly may make the difference between recovering and losing your money.