A seller in a recent real estate transaction had a mortgage payment automatically deducted from his checking account to pay off a mortgage on a house he had sold. The seller called the title agent to find out why the mortgage was not paid off at closing.

After investigating the matter, the title agent discovered the payoff check was never received by the payoff lender, even though the tracking information reflected the packaging containing the check as successfully delivered.

The title agents in the New York area were warned about the recent string of thefts. Since the alert was distributed, four New York agents reported they were victims of this new scheme and competitors of our Company have fallen victim on seven different occasions. A law firm representing many title agents has contacted the overnight delivery companies and reported the incidents to local law enforcement. The fraud scheme follows the same general pattern. A closing occurs wherein the seller directs a check be issued to satisfy a pre–existing mortgage encumbering the premises.

A cashier's or bank check is purchased and made payable to the payoff bank. The check is typically delivered to the title closer, who places it in an overnight delivery envelope, together with a copy of the payoff letter, and then places the envelope in an overnight delivery pick up location.

The overnight delivery package arrives at the payoff bank; however, the check has been removed. The checks are altered (usually to be made payable to an entity) and, have been deposited into various accounts throughout five boroughs in New York and/or neighboring communities.

At this point, we are aware of seven such instances in which this has occurred, ranging from July 20, 2015, to as recently as September 2, 2015: all involving the same overnight delivery company.

Securing packages containing payoff checks is a must. Title agents have been asked to change the sender name on the shipping label to provide added security — since title agents appear to be the target. Rather than listing the full Company name, agents are encouraged to reflect the Company's initials. This way the package is not easily identified as a package from a title company, making it less enticing.

In addition, title agents should request email notification when an exception occurs in an overnight delivery. Then they will be notified if the package is not delivered as expected. The option to receive an exception report is available online for most overnight delivery carriers. For more detailed information review Escrow Technical Memorandum #162–2014 Safety in Shipping Documents and Payments.