Tips for Preventing Homeowner Identity Fraud

Anyone can be a victim of homeowner identity fraud, including wire, mortgage, and title insurance fraud. The financial implications can be damaging and long-lasting.

Use these tips to protect yourself from being scammed and defrauded.

Wire fraud

Wire fraud usually happens during the closing phase of a home purchase. Homebuyers are typically busy with their last-minute to-do lists and unwittingly become victims to wire fraud activity.

Phishing and spoofing
The scammers scour the internet for pending real estate listings and collect as much personal data as possible about the real estate agent and seller. They pose as someone involved in the transaction by setting up a valid email address that looks similar to the real one making it easy to miss—it may contain a dot or an extra letter that is not immediately noticed. Consequently, buyers may divulge their personal and financial information. You can take preventive measures at the onset by obtaining the contact information of all parties involved in the transaction. Reference this information later to sidestep this type of identity fraud.

Database hacking
Cybercriminals are adept at capturing and identifying current real estate transactions and information about buyers and sellers. They hack into online programs used by real estate agents, title companies, and mortgage lenders, opening the door for them to track closings. Once the hackers have all the information they need, it makes it easier for them to masquerade as the real estate agent, title company, or lender, swooping in on unsuspecting homebuyers.

Wiring instructions changes
Do not reply to emails trying to confirm your wiring instructions, even if they appear to be coming from the agent, lender, or title company. You may not realize that the email is fraudulent, so be sure to verbally confirm the wiring instructions with your title company and be suspicious of calls from an unknown person who claims to be part of the transaction.

Mortgage fraud

Mortgage fraud can come in many forms, but homebuyers must pay particular attention to predatory lending practices, hacking schemes, mortgage reduction scams, or promises of foreclosure rescue.

Home refinancing
Various database systems make it easy to see who is behind on mortgage payments or who is in pre-foreclosure—this can be a goldmine for hackers who prey on distressed homeowners. These scammers will send letters, emails, or even call or text to offer their services to provide relief by refinancing your loan with low interest rates. Their intent is to obtain your personal information, including your name, address, date of birth, and social security number, which may be used for their own purposes or to sell to another entity for profit.

Forced refinancing
This scam is an attempt to steal your personal information and pose as the lender by sending you a letter that appears to be legitimate, since it includes your mortgage loan number and amount. It instructs you to call a certain number because your loan must be refinanced. They may even ask you to fill out a form or wire money to start the process.

Predatory Lending
Be wary of lenders who will not divulge their lending fees to you, try to sell you unnecessary products that are added to your mortgage payment(called loan packing), or who offers to set up an automatic payment plan for you which can result in them forcing payments from your account, leaving you with overdraft fees.

Home title fraud

Home title fraud occurs when the ownership of your home is fraudulently transferred out of your name and the scammer replaces their name on the deed. They use this updated deed to defraud lenders by using your home as collateral or selling your home without your knowledge. Although not overly common, occurrences have increased over the past five years as personal information continues to be more accessible online.

Primary targets for home title fraud include owners of vacation homes and investment properties that are not regularly monitored (have someone regularly check your unoccupied home), and the elderly. It should be noted that because these signatures are fraudulent, your property cannot legally be stolen.

Preventing homeowner identity fraud

Securing your identity is the first step to protecting yourself from wire, mortgage, and home title fraud. You should also secure your digital devices by installing firewalls and antivirus software.

Set up two-factor authentication (2FA) 
Setting up a 2FA verifies that you are the person accessing an account. Leaving this dual-factor authentication on, adds a layer of security to prevent hackers from stealing your information.

Create strong passwords
Although 2FA will supersede any attempt for scammers to use your passwords, it’s still a good idea to create strong passwords for that extra tier of protection. Be sure your passwords are not tied to your personal information, that they’re longer in length, have a combination of upper- and lower-case letters, include numbers and symbols, and don’t use complete words.

Monitor your mortgage status
Do not ignore any communication that appears to be coming from your mortgage company. Sporadically check that your mortgage information has not changed, and if something doesn’t seem right, investigate it.

Subscribe to a monthly credit monitoring service
Credit bureaus including Experian, Transunion, and Equifax, will alert you of any new activity on your account. If something appears suspicious, you can contact them immediately.

Be wary of unknown email addresses
Phishing and spoofing scams obtain your personal information by luring you in with fraudulent tactics via texting, phone calls, emails, and harmful links. Scrutinize email addresses and do not download unknown links and attachments. Never give out your personal information when contacted by unfamiliar people or businesses.

Be mindful of your social media shares
You can unwittingly provide scammers with personal information on your social media pages, such as your birthdate, family member names, or even the schools you have attended. This leaves an open door for them to guess passwords and even usernames.

5 Takeaways for preventing home identity fraud:

1. If you discover you have been a victim of fraud, you must act quickly by immediately contacting your bank, lender, or title company to freeze the transaction.
2. Protect your personal information—install software to protect your digital devices and make sure you don’t tie your information to your passwords.
3. Never open links or attachments or provide personal information to unrecognizable or questionable
4. Before wiring money, call your bank or title company for a verbal confirmation.
5. Be wary of refinancing scams—if it seems too good to be true, it probably is.