It was a split-closing. A customer who was buying a Fox & Roach listing had sold their house with another real estate brokerage earlier that day. An OUTSIDE title agency was the settlement agent for the first settlement. The unfortunate customer asked the OUTSIDE title agency wire proceeds to Trident. She was concerned that a proceeds check would not clear in time, delaying her closing. The OUTSIDE title company emailed the customer for Trident’s wire instructions.
The OUTSIDE title company did NOT realize that they had been hacked. They were not emailing the customer, but a fraudulent email address. The fraudster promptly sent fraudulent wire instructions back to the OUTSIDE title company, which then wired the proceeds to the hacker’s bank. As a result, Trident never received the customer’s funds, and the closing was postponed for several months until a solution could be found.
Had they made one phone call to Trident prior to settlement to verify our wire instructions, the fraud would have been caught and the closing would have proceeded just like any other.
Unfortunately for the buyer, the OUTSIDE title company did not follow some very simple procedures, which are required at Trident, to protect against wire fraud.
The four lessons from this fraud:
Go Old School — Encourage sellers to accept a check that is sent to them via overnight versus wiring. Currently the most secure method of delivering proceeds, and is 100% guaranteed to thwart a hacker.
Verification — Use only title agents who have a verifiable track record that they do this. There is no substitute for properly verifying outgoing wire instructions with the recipient by calling them at a trusted phone number.
Slow down! — Transactions get faster every day and settlement agents must combine excellent service with 100% commitment to protect all participants. There was no excuse post-closing (the fraud described) to not come to a FULL STOP and ensure that the money was being wired to the right recipient. There is always a risk that some closing participant may be annoyed at the pace of a closing. It’s important to remember that if settlement funds fall into the hands of criminals, the reputations of all the settlement professionals are on the line.
Educate your customers — As the trusted professional to your buyers and sellers, partner with a title agency who has a proven track record of protecting everyone at settlement.