Recent cyber security reports continue to highlight the increased intensity and scope of various schemes being used to steal millions in real-estate settlements and experts agree the vast majority of incidents are never reported or discussed. 2017 has started off at a blistering pace for record losses for the industry related to cyber criminal attacks on fund movements. During 2016, at a single government agency alone an estimated $19 million in real estate purchase transactions funds were reported lost as a result of diverting or manipulating the communications of key industry participants. Such participants including but were not limited to borrowers, settlement/title companies, builders and many others. FundingShield has been tackling funding related fraud schemes for years and continues to serve residential real estate lenders with its Wire Account Verification System knows as WAVs.
PROBLEM: Two recent schemes resulted in roughly $6 million and another in excess of $2 million in lost funds while a recent series of investigations by a leading security agency indicated that there were a number of these types of cases with the average loss being well in excess of $200,000 for each occurrence. These schemes are non-discriminatory and again while these events were reported, the current losses taking place in the market are underreported and understated.
When successful, the fraudster usually directs funds to a newly created or seized bank account. Then through various means, the funds are moved to where they can be no longer recovered. One conduit for these schemes has been the increased use of manipulated communications which is driven by a number of factors such as identifying key industry participants from company websites, social media, social engineering, spoofing, chat rooms, phishing, spam, and the use of malware. FundingShield, through the use of its Wire Account Verification Service (WAVs) helps the residential real-estate industry protect the integrity of the funding process and address the ever growing problem associated with settlement fund diversion.
SOLUTION: WAVs allows for funding to occur in a secure manner not subject to email account compromise (EAC) by providing a loan level funding verification to subscribers. Further WAVs removes the need for insecurely maintained approved settlement counterparty data being emailed around organizations by creating a single settlement oversight control system which verifies every funding, aligns your overall cyber controls in line with best practices from regulatory driven cyber requirements and takes steps to mitigate risks and report any incidents.
Bill Klumper, a longtime mortgage banking CIO, vice chairman of MISMO’s Residential Governance and advisor to FundingShield shared, “FundingShield WAVs is part of a proven family of first of a kind innovative solutions allowing residential lenders to safely & prudently operate while reducing their funding and compliance risks. We are seeing criminals invent new and disruptive approaches daily to prey upon this industry & the borrowers themselves, a loan level focused wire verification process creates an effective control in a dynamic risk environment.”
FundingShield is a leading Financial Technology company and the only provider of active loan level diligence for closings to the residential mortgage industry. The Company’s array of services provides active verification and validation at the loan level for mortgage closings and detailed analysis of the documentation used as well as systems to manage 1000’s of third party relationships. Our products & services include:
- Verification and validation services at the loan level of closing documents for lenders, insurers and title companies
- Confirmation of title insurance coverage for lenders backed by FundingShield’s GUARDIAN CERTIFICATE
- Automated audit compliance management systems for 3rd party service providers of lenders, title & state agencies & appraisers.
- Cyber security playbook, Cyber threat management, online brand reputation monitoring and brand protection, 24/7/365 tracking of key property, personnel & vendors with threat reporting automation leveraging millions of public data points.
- Specialized underwriting services to insurance companies and lenders as well as closing process audit reviews.