Can Mortgage Collaboration Be Safe Again?

Email is everywhere. Everyone uses it, and it’s generally accepted as part of everyday life. If you aren’t accessing email on your desktop, you’re most likely connected instantly through your phone. Whether for business or personal use, this is how almost everything gets done. From meeting invites to news alerts, purchase receipts to run-of-the-mill emails from family, seemingly all major transactions in life are touched by this communication method, including the mortgage process. People spend anywhere from 4-6 hours a day on email – and whether you agree or not that this is a good use of time, email is seemingly here to stay.

Things have arguably become more efficient thanks to email, particularly in financial services, especially the mortgage process. Think about your company’s origination process. To start, borrowers typically receive an email confirmation, letting them know any number of details about their loan application. From there, the title agent will send an email containing details of the property and requesting any required information. Real estate agents will keep their clients informed by emailing status updates and details pertaining to next steps. And just like that, with the exchange of a few emails, possibly never having met with your borrower face-to-face, your origination process is underway. In general, efficiency gains from these changes have been significant and helpful. Companies everywhere are encouraged to go all-digital, to eliminate paper, to respond quickly using technology. Email is an integral part of this strategy today.

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There is sense in exercising caution, however. There are risks, sometimes big ones with our ubiquitous use of this technology. From identity theft, to business email compromise, to wire fraud, you should take a careful approach to email and so should your staff. You should have a plan for educating your staff and responding to attacks and phishing attempts. But with 91% of cyber-attacks starting with email, most importantly, perhaps, is finding an alternative to email. Sure, some companies use old, antiquated systems for communication and document exchange, but these have historically been clunky and less easy to use than email. What if there was a secure strategy in lieu of email, something that not only added peace of mind to the process, but also increased efficiency? Read on to learn more.

Understand The Risk

There is a more secure strategy than email yet before explaining exactly what that is, it’s important to truly understand the risk. Just weeks ago a story hit the news here in Mortgage Cadence’s hometown. It reads like a paperback thriller. You know the kind – the one where you can sense trouble and know that the ill-fated character shouldn’t open that door (or in this case, email). A couple went to buy a house. They were emailed instructions on where to wire their funds – only somewhere along the way, the process was compromised, allowing a hacker to impersonate a title company employee. Money was wired, and by the time the mistake was realized, it was too late. The couple lost their life savings, all because of the hazards of email and the growing presence of hackers looking to capitalize on wire fraud.

According to a 2016 article published by the National Association of Realtors (NAR), nearly one-third of Brokers at an industry event indicated that they, or someone they know, have clients that were victims of wire fraud. In fact, the FBI warns that across the globe, law enforcement officers have received complaints of wire fraud in every U.S. state and nearly 80 additional countries, totaling over $2.3 billion in losses. Clearly, this type of attack is not uncommon. Hackers are acting as trusted sources and robbing anybody that falls into their traps. But how?

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A single failure by any one participant in the mortgage process exposes everyone involved. Think of it this way: whenever one of the parties’ email account is compromised, any email address copied in is also now at-risk to targeted phishing or monitoring for transaction details. Not only is your customers’ funds, identity, and other financial information at risk, but so is your reputation, if you don’t exercise caution. Across the nation, financial institutions are facing law suits due to breaches in security leading to fraudulent wire requests. Picture the headlines now: “(Your Company) Faces Lawsuit for Wire Fraud.” This doesn’t reflect favorably on your institution, and certainly not for prospective homebuyers looking to borrow money from you. So, how are you going to keep their information safe?

Educate Your People

Email isn’t going away. Therefore, you can and should implement processes to identify potentially harmful messages. The National Association of Realtors, FBI, American Land Title Association (ALTA), and others have published tips for keeping financial transactions secure. For example, here is what ALTA recently published:

>>Call instead. Confirm all instructions by phone before transferring funds using the number from the title company’s website or a business card.

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>>Be aware. It’s uncommon for title companies to change wiring instructions and payment info.

>>Confirm everything. Ask your bank to confirm not just the account number, but also the name on the account before sending a wire.

>>Verify. Call the title company or real estate agent to validate that the funds were received. Detecting that you sent the money to the wrong account within 24 hours gives you the best chance of recovering your money.

>>Forward, don’t reply. When responding, hit forward instead of reply and then start typing in the person’s email address. Criminals often use email addresses that are very similar to their real counterparts.

Informing your customers is a crucial first step. By educating them on the dangers or wire fraud and letting them know what kinds of communications they can expect from you, borrowers may be more likely to identify strange or unfamiliar emails as fraud. To that point, it is equally as important to train your staff. Keep them up to date on the latest new stories relating to this type of scam and require trainings on how to identify and prevent a breach by criminals. Awareness is half the battle. In addition to education, a new solution is needed.

Find A New Method

What if there was a better, more secure approach? A better, more secure solution is an online portal where all parties to the mortgage transaction collaborate at the same time inside a live mortgage folder. Cyber criminals cannot hack what they cannot see. Email is highly visible. The Mortgage Cadence Collaboration Center is not. Through this private network, critical customer information isn’t exposed to the outside world, thereby enhancing security. This eliminates the potential for human error as the weakest link in the transaction.

By using this new tool, which is one that routes all communications within a private network with no exposure to public servers, and one that automatically recognizes and organizes information through a predefined process, security can be significantly improved. With built-in messaging and real-time chat, this tools enables everyone involved in a transaction (borrowers, loan officers, title agents, real estate agents, other staff) to communicate in a single place, increasing efficiency and reducing cybercrime. With conversations time and date-stamped, everything remains logged and accessible – providing the ability to track and record securely. There are three main reasons this closed system enhances security:

1.) A criminal can’t hack what they cannot see. Behind the virtual walls of a closed system, communications remain secure and effectively invisible to hackers.

2.) Even if they were to somehow know about a transaction in process, the communication of the details are going on behind the wall making it significantly more difficult to compromise software than it is to gain access to an email account.

3.) And finally, by enabling all parties in the process to work together within the closed system, there is no reason for information to ever leave the software. In addition to efficiency gains from all participants having access to the information in a closed space, the whole process becomes more secure.

A closed network can help keep your customers’ money and identity safe, ensuring their trust in you, and keeping your reputation intact. Mortgage Cadence’s newly acquired Collaboration Center manages communications between borrowers, co-borrowers, real estate agents, sellers, attorneys, title agents, and all other parties on mortgage transactions, keeping all confidential data secure.

Conclusion

It is clear: all of us that participate in the mortgage industry face huge challenges when it comes to the potential for wire fraud. This is made far more likely through email. There are solutions available to address the risk for transactions within in the real estate industry, and the entire industry needs to be proactive and work together. By understanding the perils, providing constant education, and relying on closed systems for communication, risks can be reduced, keeping your customers’ data safer.

About The Author

Todd Hougaard
Todd Hougaard is Collaboration Center Product Manager for Mortgage Cadence, an Accenture Company. In this role, Todd is responsible for the strategic direction of Collaboration Center, which is designed to provide true multi-party collaboration for secure communication, document exchange, data transfer, and automation from origination through post-closing. Prior to joining the Mortgage Cadence team, Todd Hougaard spent the last two decades holding leadership positions within the mortgage technology arena, including as founder of BeesPath Inc. and Ingeo Systems and in sales operations at First American. He is an active member of the American Land Title Association, serves on the Technology Committee, and is currently an at-large member of the ALTA Title Action Network. Todd holds a B.S. in Geography from Utah State University.