At least weekly, we receive an alert that hackers have found a new way to use social engineering or hacking to gain control of a lender’s, buyer’s, seller’s, REALTOR’s, or title agent’s e-mail account. Most communications regarding a real estate closing (settlement) are handled via e-mail among the parties. Once a hacker gains access to a party’s e-mail account, they can then send a message on behalf of that party at the opportune moment to direct the title agent or closing attorney to send closing funds to a bank account controlled by the hacker.
One really fast, easy, simple, and efficient way to prevent this is to include the buyers’ and sellers’ phone numbers (especially mobile numbers), e-mail addresses, and mailing addresses on the contract that is initially signed by them and submitted to the closing agent. Then, the REALTORs should also include a coversheet with the contract that they submit that includes all of their same contact information in addition to their and their brokerages’ state license numbers (this information is required on the Closing Disclosures now).
With that information, the closing agent always has a clean and verified phone number that they can use to contact the parties directly to confirm any e-mails that the closing agent receives during the transaction in case the information looks odd or is a significant change (e.g. revised wiring instructions). Likewise, the REALTORs and parties themselves have the same information that they can use to also verify information they receive during the closing process.
It sounds like such a simple way to avoid the potential of losing hundreds of thousands of dollars (yes, we’ve seen it happen) of a seller’s proceeds or even a mortgage payoff when they are redirected by a hacker to a bank account that is quickly cleaned out via another wire to a foreign country. But you would be surprised at how seldom this simple information is omitted from the contract, even though spaces exist for it on the FAR/Bar contracts, the FAR contract, and even other states’ contracts.
So take a few extra seconds to enter that information on the contract and avoid the heartache of a hacked closing and a potential E&O claim.