A survey of 550 title agents found that 76% experienced the same number or higher of fraud attempts in 2020 as they had in 2019.
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Wire transfer fraud is a scourge on the real estate industry, and fraud attempts and losses only got worse in 2020 due to the pandemic, according to the FTC. Unfortunately, title companies and their employees are squarely in the crosshairs of these fraudsters.
ALTA's 2021 Wire Fraud and Cyber Crime Survey of 550 title agents found that 76% experienced the same number or higher of wire transfer fraud attempts in 2020 as they had in 2019. The ALTA Blog reported: "A full recovery of lost funds was only possible in 29% of cases. In 40% of the cases, less than 10% of the funds were recovered… Funds wired by an employee to a fraudulent account were only recovered less than a quarter of the time."
The increased attempts to commit fraud is one reason ALTA formedthe Coalition to Stop Wire Fraudin 2019, partnering with other real estate industry trade groups to educate consumers on the risks. Read more about that organization and the increasingly digital title process in ALTA President Diane Tomb's articlehere.
Discussing a different kind of closing fraud, industry veteran John Levonick, now CEO of Canopy, wrote afeaturefor HousingWire on the flaws of Knowledge Based Authentication (KBA) in the mortgage process.
"It should be obvious to any user of this technology that if they can find out financial facts about an individual then someone else can do the same thing. Which is exactly what is happening. To get this information, fraudsters aren't hacking into computer systems. They are going after the humans themselves."
The problem, Levonick says, could be solved with biometrics, which is "an order of magnitude more effective than the best KBA process currently available." Find out more about that proposition here.
Expert panelists from First American Docutech, Simplifile and Notarize provide the most current information on hybrid and full eNote eClosings. Watch the on-demand recording now to gain insights on eNotes, RON, and how to successfully implement your eClosing strategy. Learn More!
Knowledge Based Authentication, or KBA, is a method of authenticating a person's identity by determining whether they know things that only the actual person would know. KBA is not the tool the industry needs to move forward into the digital age.
According to an analysis by MISMO-certified wire and title fraud prevention Fintech FundingShield, wire and title fraud risk factors in mortgage and real estate closings saw an increase of 87.79% overall across all transaction types in Q1 2021.Presented by FundingShield
"The title and settlement services industry continues to orchestrate change in the real estate transaction, with the goal to end the siloed approach and deliver a collaborative transaction that best serves the consumer," Diane Tomb, ALTA CEO, says in this HousingWire magazine commentary. HW+ Premium Content
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