What First-time Homebuyers Can Do to Protect Their Down Payment from Scams?
One of the worst things that inexperienced homebuyers can do is to send their down payment to crooks, instead of sending it to their title company. Once the down payment has been transferred, it’s already too late for unsuspecting homebuyers to realize that they’ve become scam victims. As a first-time homebuyer, it’s critical that you ensure your down payment goes directly to your title company.
Online crooks nowadays are becoming more sophisticated, anticipating homebuyers who are about to make a large transaction. A recent CBS 58 Investigates article found out that in Wisconsin alone, victims lost almost $2 million to scammers in 2018.
Online scammers have become increasingly hard to detect
In February 2019, a Wisconsin Foxconn executive sent $260,000 through wire transfer. He initially thought he was sending his money to his title company. Real estate scammers typically work this way: They will first infiltrate emails of either real estate agents, title agents or anyone connected to the real estate process. Once these scammers determine that a transaction is about to take place, they will send a seemingly legitimate email giving new instructions where homebuyers should send the down payment. Scammers, who often operate in other countries, typically will instruct homebuyers to just wire the money.
FBI Supervisory Special Agent in Milwaukee Eric Burns said that scammers know the best opportunity to attack their victims, to the point that even the FBI can’t do anything. The scammers study the words, language, and tone of the emails they snoop into so that they can create a convincing email. “They’re (scammers) excellent,” Burns said.
5 tips to protect your down payment according to CFPB
As a first-time homebuyer, you may find the closing procedure exciting and stressful because you’re about to realize your homeownership dreams, and that’s the time when you’re about to send a large amount of money. At some point, scammers may already know your upcoming closing transactions if they’ve successfully infiltrated your email account or your realtor’s email. The Consumer Financial Protection Bureau (CFPB) offered 5 tips to protect your down payment from phishing scams.
- Know at least two contact persons that you can trust in the closing process – Before the closing, discuss in person to your contacts on how you’re going to make the payments. Get the names and contact details of the persons whom you’re going to trust during the closing day. Don’t easily respond to emails asking you specific details about your transactions.
- It pays to always double-check instructions before sending money – Confirm with your trusted contacts, whether through phone or in person, your money transfer details and closing instructions. Be suspicious if you receive an email giving you wire transfer instructions to send your closing fees.
- Disregard phone numbers or links found in email – Never click links or phone numbers in emails as they might be infiltrated by scammers. If an email is instructing you to download something, always verify it first with your trusted contacts. An email is likely a scam if it’s riddled with grammatical and spelling errors so be highly suspicious if you receive one.
- Never, ever, send your financial information through email – Consider handing over your financial information personally to your trusted contacts to avoid prying scammers.
- Don’t let your guards down when making phone calls – You’re going to make a lot of phone calls with various people before the closing day and it’s important that you only give information to the right person. If you’re in doubt about a particular call, verify it first with your trusted contacts especially if the caller is asking for sensitive information about your closing.
Because fraudsters have become more sophisticated in sending spoofed emails, you may want to totally avoid communicating any of your financial transactions through email.
A LendUS professional loan advisor may offer you more tips to safeguard your down payment
The professional loan advisors at LendUS understand how you’ve worked hard to save for your dream home’s down payment. If you want to know more tips on how you can protect your down payment from scams, we’re here to help you.