CertifID Inc., a wire fraud protection provider, has collaborated with federal law enforcement to issue an advisory on the latest wire fraud threat to the title insurance industry and consumers.
In recent months, an alarming increase in incidents have been reported to the company involving the listing and sale of vacant land and properties that are free of mortgage liens.These scams involve bad actors posing as owners of these vacant lots or properties. The recent trend is the latest in an ever-evolving landscape of scams focused on the real estate industry.
A copy of the newly issued warning can be viewed here.
David Kennedy, CEO of Fidelity Land Title Agency of Cincinnati, told The Title Report that CertifID recently helped his business thwart a sophisticated scam attempt.
“We did a title exam on this property and saw there was an open mortgage,” he said. “There was a blanket mortgage over several different properties. We reached out to the seller to say, ‘Hey, we need payoff authorization,’ so you can reach out to the bank on their behalf to pay off the loan. When we first reached out to the seller, they said they weren’t aware of this mortgage.
“For us, that was the first red flag. They were able to produce a social security number for the actual seller. They had information about the seller. We obtained what we call a partial release, but the issue was the amount the seller owed was more than what their sale price was.”
The FBI 2022 Congressional Report on BEC and Real Estate Wire Fraud cites business email compromise (BEC) as the leading source of victim loss reported to its Internet Crime Complaint Center (IC3), totaling $2.4 billion in 2021.
“A mortgage often slows down the (scam) process,” Kennedy said. “I think that was a mistake on their part. They were kind of pushy in the sense that they said, ‘We’ll take care of the mortgage, just send us the money.’ A good title company isn’t going to let anyone else release a mortgage. So, we insisted we’d be the ones who paid off the mortgage.”
Kennedy said a final red flag involved mention of cryptocurrency. Communication from the fraudsters ceased once they failed several identity verification steps built into CertifID.
“The (scammers) said something along the lines of them paying off the mortgage and that we could send the difference to them in bitcoin,” he said. “Anytime you see crypto, bitcoin like that, you pump the brakes. That, along with an attitude of just pressuring everyone, or if emails are sent in the middle of the night, where someone could be operating out of a different time zone.
“CertifID really was the ultimate hero. We had our suspicions, but CertifID was what proved the fraud to us, showed us exactly what was going on, without any doubt. We wouldn’t have been able to really know that otherwise. I don’t know how this may have played out without CertifID. We probably would’ve had to ask them to come into our office. CertifID stopped it before any money changed hands. It was the perfect tool. We use it on our buy side and sell side.”
According to CertifID, steps taken by fraudsters in these kinds of operations can include:
● Searching public records to identify real estate that is free of mortgage or other liens. These often include vacant lots or rental properties. The identity of the landowner is also obtained through this public records search.
● Posing as the property owner, where a scammer contacts a Realtor to list the property for sale. All communications are through email and digital means, and not in person.
● Listing a property below current market value to generate immediate interest.
● Quickly accepting the offer with preference for cash sales.
● Refusing to sign documents in person and requesting a remote notary signing. The scammer impersonates the notary and returns falsified documents to the title company or closing attorney involved in the transaction.
● The title company or closing attorney transfers the closing proceeds to the scammer.
Fraud is typically not discovered until the time of recording of transferring documents with the applicable county.
“This recent trend involving seller impersonation is particularly concerning, as the real property owner is typically not aware nor in a position to prevent the fraud, until it is too late,” Thomas Cronkright II, Executive Chairman of CertifID, said. “Unfortunately, it’s just the latest evolution of wire fraud that affects title companies, law firms, lenders, Realtors, and homebuyers and sellers. Our company has received hundreds of cases and helped recover over $52 million for victims in the last two years alone, by partnering with the U.S. Secret Service.”