Almost half of Q3 transactions had issues leading to wire and title fraud risks at closing
As the risk of wire and title fraud increases, the discussion around the problem in the industry grows louder.
Earlier this year at MBA Tech 2022, the Mortgage Bankers Association held a panel that included title industry executives, lender risk management executives and fintech risk vendors discussing wire and title fraud. The panel focused on how to get ahead of the risk.
Organizations such as the National Association of Realtors (NAR) are now reporting on wire fraud consistently. NAR’s online wire fraud resource site cites the FBI’s Internet Crime Center (IC3) data in saying that on average, 2,300+ complaints of wire fraud have occurred daily over the past five years.
The Consumer Financial Protection Bureau (CFPB) has worked with trade organizations such as the American Land Title Association (ALTA) to create educational videos to inform stakeholders of the risks of wire and title fraud and what to look for in email communications.
And the IC3 now highlights real estate wire fraud as one of the largest white-collar crimes in terms of occurrence and impact, while recognizing that its data is based on what has been reported and many of the related losses and risks are not reported or captured by the FBI.
Wire and title fraud risk reaches new highs
The call for more awareness and education around wire and title fraud risk is timely, as the risk only increases.
According to a Q3 analysis by MISMO-certified wire and prevention fintech FundingShield, 47.9% of transactions had issues leading to wire and title fraud risk at closing and 5% of transactions were not registered or valid in title insurer systems at time of closing. Additionally, FundingShield found that there was a 35% increase in Closing Agent Insurance policy coverage gaps and a nearly 50% increase in transaction data and title file order registration issues at time of close.
“Wire and title fraud risk reached a new record in the third quarter of 2022 at 47.9% of transactions having at least one risk issue,” FundingShield CEO Ike Suri said. “With the contraction in market transaction volumes, the impact is that much more severe for lenders. A single wire or title fraud event could be catastrophic which is why we are seeing double digit client growth.”
Risk prevention and education
According to Suri, the rise in wire and title fraud risk noted by regulators, law enforcement, trade organizations and FundingShield demonstrates that wire fraud prevention is a necessary tool in the enterprise risk arsenal.
“Not paying attention to this cybersecurity risk as we continue to digitize all aspects from application to closing to sourcing and listing properties is no longer an option for financial institutions and their clients,” Suri said. “Education is a great first step, but to avoid losses, lawsuits, delays in closing and reputational harm, risk prevention tools and strategies need to be deployed.”
How FundingShield can help
In Q3, FundingShield was able to uncover several fraud schemes and prevent client losses by working in coordination with title insurers, attorneys, lenders and the security teams of closing agents. A common feature of the more recent attacks was fraudsters not only controlling email communication but also hacking into phone systems of closing agents such that verbally confirmed wire details were being confirmed at legitimate phone numbers by the fraudulent parties.
“This is something FundingShield has seen in fraud scenarios for several years,” Suri said. “Our firm has procedures and controls to assure verification of source data to prevent these attacks from being successful.”
These wire and title fraud issues highlight production errors, misrepresentations, control issues, cyber-attacks and business email compromise events that create ideal conditions for fraudsters to prey.
FundingShield helps prevent, identify and resolve these efficiencies, threats and exposures in a timely manner so lenders can run their businesses without interruption, reputational nightmares or losses by working with only valid, verified and vetted closing agents across the country.

Have A Question?
Use the form below and we will give your our expert answers!
Reverse Mortgage Ask A Question
Start Your Loan
with DDA todayYour local Mortgage Broker
Mortgage Broker Largo See our Reviews
Looking for more details? Listen to our extended podcast!
Check out our other helpful videos to learn more about credit and residential mortgages.
