Mark had moved back to the states after working overseas for a stint with a major oil and gas company. He was literally starting over when it came to owning stuff. He needed to buy a house, a car, and furniture to fill that house. He had been smart about things and all was planned out. He had set aside enough money to get things done but there was a lot to do and everything was happening at once. He was excited, yet still had to check off many “to-do” items.
A friend had referred a realtor and Mark started working on finding a property while he was still overseas. By the time he was on home soil the potential home list was narrowed down and things moved pretty efficiently. He found a home that he liked and made an offer. After some of the normal back and forth negotiations the house was his. Another item he was about to be able to check off his list.
A couple of more entities got involved at this point. Mark had his realtor, his mortgage company and now a title company to communicate with. Everything appeared to be going as planned. The mortgage company gave him an estimate of what he would need at closing. He decided how much to put down on the house. The title company was confirming everything and communicating via email with all that were involved. The mortgage company emailed the title company, the title company emailed the realtor, and the realtor copied Mark. Everything was going without a hitch.
Mark arrived at closing all ready to get the formalities done. He followed the written instructions that he had received via email from the title company and had already wired the down payment and closing costs to the bank. After he signed off on what seemed like hundreds of pages he was the happy owner of a new home. It was still early in the day.
Finally…a place to call his own but more importantly a place to rest. His move had been fast and hectic and he realized that he had not really sat down to “do nothing” in weeks. His first task at home…take a nap. After the nap he had some food delivered and could breathe a little easier.
Until his phone rang. It was about 3:00 in the afternoon by this point. It was Cindy at the title company. “Mark, how are you?” she said, a more business-like tone than normal. “Good, happy to be in the home. Is there something wrong?” Mark replied. Cindy got straight to the point “Well, we seem to have a problem. We don’t have your money.” That is interesting, Mark thought. My money has definitely left my account and I am in my new home. “There has to be a mistake” Mark replied. “My money is not in my account. It must be in yours” he said. “Our bank called and they never received your wire. Can we check the account numbers?” Cindy asked.
So they did and what they figured out left them both in shock. Mark had wired his six figure down payment to an account that the title company had never heard of. Impossible he thought. He pulled up the email he had received from the title company. He could see that his realtor had been copied and in fact it was from Cindy. He read the numbers again. Yep, it all looked correct. Cindy asked him to forward the email to her and then the pieces of the puzzle started to look pretty bad. Cindy did not send that email. Yes, it came from Cindy’s email address but all of the information was wrong. At this point, Mark had to get out of his house. Well, it was not exactly his house. He had not paid for it. He shouldn’t even have a key. He did as he was told. It was back to the hotel room that he had been living in for months.
So what happened? Mark fell prey to a very sophisticated scam. A hacker took control of all of the players involved: the mortgage company, the title company and the realtor. Any email that was sent by the parties involved was intercepted, edited and then sent on. Everyone thought they were communicating with each other when in reality they were not. The account numbers were easily changed and the money was stolen.
The FBI got involved but the money was long gone at this point. Mark was told there was no way to retrieve the money. At first, no one would take the blame. I get it…no one person or one entity was entirely at fault. But isn’t the title company involved to add some “security” and “comfort” to the entire process? If that is their role shouldn’t they step up and cover the mishap? It for sure was not Mark’s fault.
Fast forward 30 days. Still no resolution in finding the criminal. However, the realtor told Mark that he would take part of the responsibility with Mark and cut a check for half of the lost money back to Mark. That is what I call integrity. This guy is now Mark’s realtor for life…and will be referred to everyone that Mark knows that needs a home.
Sadly, Mark still had no home and was considering scrapping his home buying plans and just finding something to rent. Basically he was tired…tired and worn down mentally. He wanted to give up. You could hear it in his voice. Then his phone rings. It was the bank that he wired his money to. The bank with the bogus account that belonged to the overseas hackers. The bank, in my opinion, was a third party to this transaction. They were not involved in the emails. They were not giving instructions. They were not hired to protect the buyer and seller. Yet, they were calling to say that they were covering 100% of the lost money and would have it back to Mark as soon as he could give them wiring instructions to his personal account. Within four hours of that call he was made whole. He could take a deep breath again and moved ahead with the purchase of the house that he had already napped and had his first meal in.
How could this have been prevented and what should you do the next time you buy a house? Email is convenient but as you can see it can be hacked. I suggest confirming things with a phone call. Remember those days when we had to actually talk to people? It may save you thousands to do that again. If anyone involved would have simply confirmed the instructions this mess could have been averted. Don’t blindly trust the printed word.
Thankfully, this story had a happy ending. Yes, Mark paid the realtor back. However, I can say with pretty high confidence that he will never ever deal with the same title company again.
This is a fictional story for illustrative purposes only and are not based on actual people.
FINANCIAL ADVISOR WARNING! Are you being ripped off? Call 281-907-5136 to hear the 5 Costly Misconceptions about Financial Planning. Byron W. Ellis, CFP®, CLU®, ChFC®, CRPC®, is a CERTIFIED FINANCIAL PLANNER™ professional and Managing Director of United Capital Financial Advisors, LLC, a Financial Life Management firm. The information contained in this article is intended for information only is not a recommendation, and should not be considered investment advice. Please contact your financial advisor with questions about your specific needs and circumstances. The opinions expressed herein are those of Byron Ellis and not necessarily those of United Capital Financial Advisors, LLC.