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Mortgage Payoff Fraud Spikes!

08/31/2023 1:37 PM | Scott Merritt (Administrator)

Mortgage Payoff Fraud is spiking! Home sales may be down, but fraudsters are amping up on Mortgage Payoff Fraud. This alarming trend is significantly impacting our industry and can be devasting to a title agency due to the size of the loss.

What is Mortgage Payoff Fraud?

Mortgage Payoff Fraud is a deceptive scheme where fraudsters attempt to manipulate the mortgage payoff process during a real estate transaction. They may falsify information related to mortgage payments or attempt to divert funds meant for mortgage payoff to their own accounts. This can lead to serious financial repercussions for both the title insurer, title agent, and the parties involved in the transaction.

How to fight back? Here are some tips to add to your process for obtaining Mortgage Payoffs!

  1. Always be on the lookout for a new payoff replacing a current statement you have on file.
  2. Create a database of previously verified accounts and payees for each bank/lender and match the wire information in the payoff statement to what is in your internal database.
  3. Verify all parties – lender, borrower, and any intermediaries - ensuring that all are legitimate and authorized.
  4. Verify with the payee using a previously verified phone number you have on record; never use the one on the payoff statement.
  5. When verifying, have the bank verbally read the account information to you, instead of reading it to them.
  6. If unable to verbally verify the payoff wire instructions, choose to arrange for an overnight payment made by check instead of wire.  Mail it to the address you have on file for the lender.
  7. Do not rely on third-parties, such as mortgagors or sellers, for information.
  8. Do not click on a link in an email that appears to come from the lender without verifying it is legitimate first. These links could take you to a fraudulent website or portal.
  9. Be sure to use secure communication for sharing sensitive information like wire transfer instructions and account details.  These channels should include multi-factor authentication, and when communicating over the phone, consider employing authentication questions and passwords as extra security measures.
  10. Order payoffs with enough time to allow for verification procedures.
  11. Have staff meetings on a regular basis to remind everyone to be vigilant and review procedures.
  12. Have a clear and detailed Incident Response Plan should an event happen. 

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