Wire fraud and phishing scams are growing issues in the real estate space. The FBI’s Internet Crime Complaint Center (IC3) reports an 1100% increase in Business Email Compromise scams. These are financial fraud that targets wire transfers by both businesses and individuals.
Unlike most Internet scams, there are several vulnerable targets in a single mortgage transaction – buyers, sellers, real estate agents, attorneys, mortgage lenders, title companies, notaries. Here is how one title agency, Community Title Network, uses remote online notarization to identify real estate fraud.
Community Title Network knows how to pull off a closing – from home or abroad. With offices in the District of Columbia, Virginia, Maryland, and Delaware, their agents often help government employees and military personnel as they depart for service and return home.
So Mark’s contract was nothing new to anyone on the Community Title Network team.
Mark was renting out a property stateside while living and working in Africa. One day, he emailed his property manager about selling his home. The email came from Mark’s email address, so the listing agent found a buyer and spun up a contract.
Mark was vocal about closing the deal as soon as possible and offered a significant discount on the property. That caught the eye of folks at Community Title Network. For someone trying to sell in a hurry, Mark showed no urgency in booking an appointment to sign his power of attorney with a notary at his local consulate.
Community Title Network shipped the power of attorney to Mark electronically and explained that he would need to get it notarized at a consulate. Mark gave a number of excuses about how he didn’t have the time and instead wanted to use a local notary. Community Title Network informed him that wasn’t an option.
As a compromise, they told Mark he could sign online with Notarize, the first platform to enable fully online real estate closings. Notarize connects signers to commissioned electronic notaries through secure, two-way audio and video feeds. The platform relies on credential analysis and knowledge-based authentication for identity verification, and each transaction is recorded for quality assurance.
As soon as he learned the session would be recorded, Mark canceled the sale. Community Title Network later learned that Mark’s email was hacked in an effort to flip his property. The recorded notary session is what scared off the imposter. “The key here was the aversion to video on Notarize’s platform,” said Kevin Bayly, Managing Attorney at Community Title Network. “There was always an excuse to use something else, but nothing ever made sense.”
Two weeks later, Community Title Network felt like it was going through déjà vu.
Amy was living and working in a European capital and felt it was time to sell her home in Washington, D.C. Community Title Network had a strong relationship with the buyer’s realtor, but it was their first time working with Amy’s listing agent. No matter: Community Title Network reviewed the contract and made it clear that due to her location, Amy would need to sign documents at a consulate or embassy.
What was odd about this transaction was that the listing agent requested all communication go through Amy’s husband, who was not on the title. Amy did not respond to emails, was too busy to complete seller welcome letters, and reportedly could not find a way to print settlement documents despite living in a major city.
As the sale progressed, there was mounting pressure and growing urgency from all sides to finish the deal. However, just like Mark, Amy’s actions told another story. Amy failed to book an appointment with a notary at the embassy, and at the last minute, Community Title Network was told it was too late to book one. Community Title Network called the embassy to confirm and found several available time slots. “There was an excuse for everything,” said Bayly, “but who can be too busy to sell a million-dollar home?”
The couple also made a number of last-minute adjustments to the contract. The sale was reaching the home stretch, and Community Title Network still had not been in touch with Amy. The listing agent didn’t think it was odd due to their previous relationship.
With the Mark imposter still fresh in their minds, Community Title Network went on the offensive. “From our perspective, as soon as the radar goes off that there could be some kind of malfeasance involved, we don’t take chances,” Bayly said. “We treat it all carefully and with consideration as to the process.”
Community Title Network requested that Amy close using Notarize and its security features. The couple then canceled the transaction altogether, citing contractual issues. Community Title Network thought it caught another thief in the act. But a couple of days later, the listing agent confirmed there was an appraisal issue. Community Title Network agreed to conduct the settlement, but requested Amy use the Notarize platform so they could confirm her identity with the listing agent.
Amy was again said to be too busy, but the Notarize platform gave her four full days to close on her terms – even with the six-hour time difference. Once Amy completed her closing documents, Community Title Network verified her identity with the listing agent using the video recorded during the session. By leveraging technology, Community Title Network and its partners were able to move forward with the peace of mind that the transaction was valid.
