Mortgage Payoff Statements Becoming Gateways To Fraud

Fraud perpetrators are increasingly initiating wire fraud scams by targeting the industry practice of emailing or faxing payoff requests to title and escrow companies, according to a new white paper from CertifID.  As a result, the company is observing a breathtaking increase in the use of “spoofed” mortgage payoffs and fraudulent payoff statements to pull off wire fraud schemes.


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This disturbing trend is analyzed in Mortgage Payoffs Under Siege, a free, online white paper published by CertifID CEO/Co-Founder Thomas Cronkright, author of multiple reports on the burgeoning wire fraud trend. According to the white paper, over $1 trillion in mortgages are paid off each year; with most done so by wire. Traditional mortgage wire fraud scams usually began with a fraudster deceiving a buyer or key party to the transaction into believing that imposter was a key party to the transaction (such as the seller); then changing already established wiring instructions (with the funds then being diverted to the scammer).  Now, fraudsters are deceiving title companies by issuing counterfeit mortgage payoffs and wire instructions from the start.


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“Fraudsters now understand that it’s not that hard to ‘spoof’ or imitate an authentic payoff statement—and that statement is the ultimate authority for title or escrow companies awaiting official wire instructions,” said Cronkright.  “As a result, the agent’s guard is down and, once the fraudulent payoff statements are received by fax or email, the funds are quickly and mistakenly wired directly to the criminals.”


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Cronkright notes that this new wrinkle directly attacks the conventional best practice which marks any change to wiring instructions as a red flag. “Now, the fraudulent directions are often the first instructions the escrow or title agent even sees.”

The white paper describes five emerging examples of payoff fraud, including how the schemes work and what title and lending professionals can do to identify and prevent them.

The white paper can be downloaded at no cost at https://certifid.com/white-paper-payoff-fraud/.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.