banner
article3photo
byline
in this issue
article1
article2
article3
article4

 
Wire Fraud Tales

Anna Ortiz, a payoff clerk for Ticor Title's payoff processing center in Riverside, California, is the fifth person in her office to prevent an illegal diversion of a wire transfer of consumer loan payoff funds.

The settlement agent for the transaction was an independent escrow company. Anna was handling the payoff of an existing encumbrance secured by the subject property on behalf of the title officer. The escrow officer at the independent escrow company sent the payoff statement to Anna via email.

The protocol in Anna's office is to verbally verify the wire instructions reflected on the payoff statement, especially since the payoff statement came from the independent escrow company and not directly from the payoff lender.

In this particular file, Anna noticed the wiring instructions had not yet been verified. She made the call to verify and the payoff lender representative stated the payoff statement Anna had in hand did not contain the correct bank wire information.

Luckily, Anna was able to obtain a new payoff statement directly from the payoff lender, reflecting the correct bank wire information. Once she received the statement via eFax®, she called back the payoff lender to verify the payoff amount and wire information for a second time. This time the bank wire information was valid.

Anna then provided both statements to her supervisor, Chad Finn. Chad contacted the independent escrow company's escrow officer closing the transaction and together they reviewed incoming and outgoing emails in connection with the subject transaction. During their conversation they discovered the escrow officer's email account was most likely compromised.

It appeared someone sent an email from the escrow officer's account to kiss4dan@gmail.com with the payoff statement attached. The attachment contained the correct bank wire information, which is most likely how the fraudsters were able to obtain the good demand and alter it.

The escrow officer confirmed she did not send the email, as she was on vacation in Canada during that time and she had no idea who kiss4dan@gmail.com was. That email address was totally unrelated to the transaction. The person who intercepted and altered the payoff, then sent the altered payoff statement to the escrow officer using a spoof email account impersonating an employee of the payoff lender.

After Anna and Chad hung up the phone, the escrow officer changed her password and contacted her Information Technology (IT) manager. She asked to have her workstation and email account scanned for any compromise.

Anna's diligent effort to verify the bank wire information saved the Company from a potential loss. Thank you Anna! As a result, she will receive a $1,500 reward and a letter of recognition from the Company.

Wire Fraud Saves

On August 28, 2019, Luis Olivares, an extraordinary escrow officer from Fidelity National Title's Napa, California office, ordered and received a payoff statement via eFax from NOVAD Management Consulting, LLC. NOVAD is a contractor for the U.S. Department of Housing and Urban Development (HUD) and services Home Equity Conversion Mortgages (HECMs) for HUD.

The payoff statement contained instructions that read, in part, as follows:

  "Please note that only a cashier's check or certified funds are acceptable methods of payment; all other methods will be returned. The check must be made payable to the Department of Housing and Urban Development (HUD). Include your loan number on your check."

On September 4, 2019, Luis received an email from the seller with an updated payoff statement from NOVAD attached. Luis reviewed the payoff and discovered the payoff figures had not changed. The payoff statement, however, now contained bank wire information. Luis recognized the following red flags warning that something was awry:

  • The seller should never provide their own payoff statement. It should always come directly to our offices from the payoff lender.
  • The figures in the first statement matched the payoff figures in the second statement, there was no need for the lender to issue an amended statement.
  • NOVAD has never accepted wire transfers for payoff funds.

Luis called NOVAD's offices and confirmed they did not issue the updated statement and the bank wire information was not an account in HUD's name. He hung up the phone and screamed, "BUSTED!" Luis contacted the listing agent, who then called the seller and confirmed the seller never sent Luis any emails regarding the payoff.

Luis relied on the initial payoff statement to close the transaction and pay off the existing mortgage — not the updated statement containing the fraudster's bank wire information. The updated statement containing the bank wire information was forwarded to the bank, informing them of the account holder's attempt to illegally divert funds to their account.

Luis' keen sense that something was wrong with the updated statement — and his swift actions to confirm his gut feelings — saved the Company from a potential loss. Way to go, Luis! As a result, he received a $1,500 reward from the Company and a letter of recognition.

 

 
  SHARE    
 
 
 
footer_line
 
stop fraud! share
 
footer_line
 
 
FNF Home