Years to save for a down payment—and 10 seconds to watch it vanish into a foreign bank account. The heartbreak is real.

Mortgage closing consists of a coordinated series of crucial steps, each of which must be done before the next can start. You hop aboard the closing train knowing that it could be 45-50 days until you reach your destination. But beware: Bandits might hit your train.

Closing scams have robbed people of their life savings, warns the Consumer Finance Protection Bureau (CFPB). Given the large transactions (your entire down payment and closing costs) and our increasing trust of paperless documentation and faceless communication, thieves have found fertile hunting ground among homebuyers.

"The FBI has reported that scammers are increasingly taking advantage of homebuyers during the closing process," wrote Melissa Yu for the CFPB. "Through a sophisticated phishing scam, they attempt to divert your closing costs and down payment into a fraudulent account by confirming or suggesting last-minute changes to your wiring instructions."

Closing Scam: The Basics

Posing as your real estate agent or an authorized representative, the scammer will send you a spoof email with instructions for wiring your funds. You may think you could tell a fake message from a real one, but it's woefully easy today for scammers to craft a legit-looking message, complete with believable links, proper English, and brand logos.

Homebuyers were scammed out of $1 billion in a single year, said the FBI. When it happens, the savings that people had been building up for years to buy a home vanishes in the blink of an eye, often going to an overseas bank.

How do criminals succeed in duping so many? By the time the scammer sends you the bogus closing instructions, they have been watching and reading your email messages for weeks. Criminals take advantage of lax email security to monitor messages between borrowers, closing attorneys, and title companies. They learn what legitimate messages look and sound like, what name the borrower prefers to be called ("Jim," not "James"), and so on.

Like clock work, mortgage closing scam mail: "Oh we're having issues with wiring instructions, send your money over here instead!" pic.twitter.com/10oijD9czS
— Arturo Lucatero (@ArLucaID) September 30, 2021

According to the Federal Trade Commission, if the buyer takes the bait, their bank account could be cleared out in a “matter of minutes.” The FTC also said that the chance of getting the money back is almost zero.

"Some email scams don’t target money," noted Re/Max agent Kay Pratt. "Instead they try to get the victim to reveal personal information such as social security numbers, bank accounts, or even W2 tax forms. This way the scammer can steal the identity of the individual, often apply for credit in their name. Needless to say, this can come at a very inopportune time if you are trying to close on a house!"

What People Are Doing About It

“Mortgage fraudsters threaten the soundness of the real estate market in our community," said U.S. Attorney Byung J. “BJay” Pak. "We will investigate and charge anyone who takes advantage of our mortgage lending system for their own personal gain.”

With the scam on the rise, many mortgage professionals, including those here at Rate Simple, have revised their procedures. Speaking to an ABC News affiliate, closing attorney Bill Halbrooks of Homewood, Alabama, said that everyone in the industry is on alert and moving to more secure email, faxing when available, and warning buyers.

Halbrooks said one of his clients almost got duped out of $42,000. "We caught that one in time," he said.

“Buying a home should be an exciting event, but sadly an email and money-wiring scam is underway targeting consumers’ sensitive financial information.”
—Tom Salomone, president of the National Association of Realtors

Alabama resident Serenity Isom wasn't so lucky. She and her young family lost $12,000 in the scam. Just days before closing the loan on their first home, she received fake instructions by email about where to wire the money. "[We were finally going] to own our own home and we just fell for this stupid scam," she told the local ABC News affiliate.

Protect Yourself From the Closing Scam

The CFPB advises borrowers to identify two trusted people who can confirm the payment instructions, such as the realtor or settlement agent. Write down their contact information, and verify future messages by calling them on that phone. Let them know you will be calling to confirm instructions throughout the process and that you prefer postal mail to email when possible.

Either in person or by phone, discuss the closing process early: how the money will be requested, can it take the form of a cashier's check or must it be wired, and so on. Take notes. Anything that veers from the plan later is a red flag!

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Be cautious about sharing any of your closing details by email. Make a phone call instead. Nowadays almost everyone carries a phone at all times. Protect yourself from phishing emails by making phone calls, hearing familiar voices. Every smartphone can handle videocalls too, so you can both see and hear who you are dealing with.

"Verify the closing instructions, including the account name and number, with your trusted representatives either in person or by using the phone number you previously agreed to," advises the CFPB. "Avoid using phone numbers or links in an email [because] scammers can closely replicate the email address, phone number, and format of an exchange from your agents."

Similarly, use caution before opening or downloading any attachments in an email. Confirm with one of your trusted people that the message is legit.

FBI's #1 Piece of Advice:

Do NOT email financial information. Email is never a secure way to send financial info, and all real estate and mortgage professionals should know this.

Finally, it may be difficult to identify whether a phone call is fraudulent or legitimate, so be cautious whenever someone other than a trusted individual reaches out for your info. Scammers may call and say, "I work with so-and-so, and we just need to verify your info really quick" and the next thing you know you are rattling off your account number and SSN to a complete stranger. It happens to savvy people all the time. Tell such callers that you will deal with the request right away, politely hang up, and call your trusted individual.

Criminals Are Hijacking Mortgage Closings

Beware! Scammers hiding inside compromised email accounts can steal your down payment.