Homebuyer’s long read
Protect your closing funds from wire fraud
How closing scams use fake emails to redirect down payments, the verification steps the CFPB recommends, what to do immediately if you wired money to the wrong account, and where to report it.
Your down payment and closing costs are likely the largest single payment you have ever made. The CFPB notes that cash to close is usually paid by cashier's check or wire transfer. That makes closing a target for criminals. This chapter explains how the scam works and the simple habits that defeat it.
Who handles the money
It helps to know who should be involved before anyone asks you to send money. In most purchases:
- your lender funds the loan and sends the Loan Estimate and Closing Disclosure;
- a settlement agent, which may be a title company, escrow company or attorney depending on your state, collects and pays out the money at closing;
- your real estate agent helps with the contract but usually does not receive your closing funds.
Ask at the start: "Who will send me wiring instructions, how, and when?" Write down the answer. Any message that does not match that plan, such as instructions from a different person, a different channel, or a different bank than expected, is a reason to stop and call. A legitimate settlement agent will not object to you checking.
How the scam works
The CFPB has described a scam in which criminals try to divert closing costs and down payments by sending homebuyers emails that confirm or suggest last-minute changes to wiring instructions. The emails can appear to come from a real estate agent, settlement agent, attorney or another trusted person. The CFPB explains that scammers target real estate professionals and try to compromise their email so they can monitor conversations and identify upcoming closings. Scammers can closely copy email addresses, phone numbers and formats.
The CFPB post describing this is now archived on its site, so some details may be dated, but the pattern and the defenses it describes remain the core advice.
The CFPB's protective steps
The CFPB recommends:
- Identify two trusted people to confirm the closing process and payment instructions, such as your real estate agent and settlement agent.
- Talk about the process in person or by phone ahead of closing, including how money will be transferred. Be cautious about exchanging closing details by email. Consider creating a code phrase known only to these trusted parties.
- Always confirm instructions before wiring money. Never follow instructions in an email. Verify the closing instructions, including account name and number, in person or by calling a phone number you agreed on earlier.
- Be careful with links and attachments. Avoid clicking or downloading without confirming with your trusted representatives first.
- Be wary of calls asking you to verify personal or financial details. When in doubt, check with your trusted professionals.
Habits that make it easy
Get phone numbers from a trusted source early. Save numbers for your agent, lender and settlement agent from a business card, a signed contract or their official website, before closing week. Do not use a number from an email signature you did not already trust.
Treat any change as a red flag. Legitimate wiring instructions rarely change at the last minute. If you receive any change, stop and call.
Confirm after sending. After wiring, call the settlement agent, again at the trusted number, to confirm the funds arrived.
Ask about alternatives. Ask your settlement agent whether a cashier's check or another method is accepted and what they recommend.
Slow down. Urgency is part of the scam. A real settlement agent will understand if you take an hour to verify.
If you think you sent money to the wrong account
The CFPB's first step is to contact your bank or wire-transfer company immediately and ask for a wire recall. It notes that reporting the error as soon as possible can increase the likelihood of recovering your money. Then:
- Call your settlement agent and real estate agent at trusted numbers.
- File a complaint with the FBI's Internet Crime Complaint Center at ic3.gov, which accepts reports of internet-enabled fraud.
- Ask your bank what else it needs from you and whether to contact the receiving bank.
- Write down everything: times, amounts, account numbers, emails and calls. Keep the suspicious emails.
Every minute matters. Do not wait to see if the money turns up.
Protect the information you share
Throughout the process you send pay stubs, bank statements and identification. Use the secure upload method your lender provides rather than ordinary email where possible. Keep your own email account secure with a strong unique password and two-step verification, because a compromised buyer inbox can also be used against you.
Put it on your closing checklist
On your closing day checklist, add:
- trusted phone numbers verified;
- wiring instructions confirmed by phone at a trusted number;
- funds confirmed received.
Scam tactics change. Check the CFPB and the FBI for current warnings.
Questions to take into the next conversation
- Ask your settlement agent and real estate agent how wiring instructions will be delivered, and write the answer down.
- Save trusted phone numbers for your agent, lender and settlement agent from a source other than email.
- Agree on a code phrase with your settlement agent if they are open to it.
- Write your bank's fraud phone number on your closing checklist.
I got an email with new wiring instructions from my title company. What should I do?
Do not follow it. The CFPB's advice is never to follow wiring instructions contained in an email, and to verify instructions, including account name and number, in person or by calling a phone number you agreed on in advance. Call your settlement agent at a number you already trusted, not one in the email, before sending anything.