FRAUDULENT MORTGAGE PAYOFF LETTERS
We have been hearing from Title Companies about an increase in the use of fraudulent mortgage payoff letters. As a consequence, many Title Agents are modifying their procedures for satisfying mortgages at closings such as requiring that the Title Agent receive payoff letters at least 24 hours prior to closing in order to have sufficient time to verify the authenticity of the payoff letter. Also needed to be verified is the telephone number for the payee bank, the address or wire instructions provided in the payoff letter so as to avoid payoff funds being sent to the fraudsters.
The Payoff Lender will have to be independently researched and then contacted at the contact information found through the independent research.
An example of how the fraud is being perpetrated where the Seller receives a revised Payoff Letter by email on the day of the closing which changes the method of payment (i.e. instead of a wire transfer, a bank check; or the wire instructions are suddenly different). The fraud perpetrators are able to forge a “revised” fraudulent Payoff Letter by hacking the email accounts of one or more of the parties involved in the transaction, and once in an email account, they have access to all of the Lender’s payoff information including the loan number, current balances of the loan, payoff amount, per diem interest, and late payment penalty. They then open a bank account at the same financial institution in the same jurisdiction of the mortgage lender so the routing numbers are identical. More sophisticated criminals create a fraudulent website that mirrors the real URL and page content, then send a link in an email that looks legitimate and when the link is clicked the unsuspecting victim is directed to the fraudulent website created by the criminal which looks very much like the official website of the financial institution.
The best way to avoid payoff fraud is to first be aware and second to independently verify all information with the Payoff Lender by looking up yourself the Lender’s contact information, making the contact that way and then verify every detail of the alleged Payoff Letter. Only by exercising such diligence, which takes time and patience, cay we hope to avoid falling prey to the fraudulent Payoff Letter scam!