Protecting Home Buyers From Electronic Fraud



How secure is your business from fraudsters? On the front-end, you are probably checking the buyer’s income and employment, as well as the value of the house they are buying. What about the backend? You protection of borrowers from hacking that could jeopardize their data or make their down payment disappear?

Such a loss would be devastating for a buyer who has been saving this money for years. But as a lender, you will also pay a certain price. According to the Mortgage Bankers Association, if a loan is delayed (or irretrievably disrupted), you will lose more than $ 8,000 on average and will likely be on the hook to recoup any lost funds.

By numbers

Bank fraud is huge and growing problem affecting the financial services industry.

In 2020, the FBI’s Internet Crime Complaints Center (IC3) received 19,369 corporate email / email account compromise complaints with adjusted losses of over $ 1.8 billion. And there are likely to be many more undocumented losses due to embarrassment and concern about reputational damage.

The escalation recently caught the attention of Fannie Mae and the Consumer Financial Protection Bureau, which encouraged lenders to use third-party solutions to protect themselves and their borrowers from electronic fraud.

Protecting your business

The good news is that plug-and-play technologies are available to help you verify in real time who is legal (and who is not) when you transfer money. And with a software-as-a-service (SaaS) model built by a trusted third party, you can access these technologies without your in-house programming knowledge and expense. In addition, with a pay-as-you-go business model, small and independent lenders have access to the same technology as larger ones.

SaaS apps are on the cloud, so they can be accessed over the Internet or through an application programming interface (API). Lenders can use these applications to initiate timely (JIT) verification of dealerships, business licenses, attorney licenses, corporate identifiers, jurisdictions, blacklists, and more – all of which are required for secure bank transfer when closing a loan. This type of verification uses an extensive real-time database to verify all stakeholders in real time in order to detect and reflect fraud and find a legitimate alternative agent.

Do you think it sounds like science fiction? This is already happening in the securities industry, where companies can verify transaction information and complete trades in seconds.

Customer protection

What’s more, you can use the same SaaS connection with real-time verification tools to protect your borrowers. In this scenario, you must provide a link that looks like it is a tool on your website, but actually allows the borrower to use your cloud-based verification technology. Borrowers will use this link to securely initiate a bank transfer, instead of waiting for a response to email instructions that might have been sent by anyone.

With this secure connection, you ensure their money is delivered to the intended, licensed and real-time verified party in accordance with regulatory requirements.

It’s just good business.

Passing the extra mile

The mortgage industry must verify identity in real time with every transaction.

In fact, I foresee that this will become a business imperative. We are already moving in this direction: industry leaders are calling for additional consumer protection, and investors are looking for confidence that all stakeholders involved in the closure have been verified in real time to ensure that the loan is protected from losses if misstatement is later discovered. facts.

So think about it and count the numbers. How much can you afford to lose from scammers this month? Next month? Until the end of 2021? What about your reputation?

What is certain is that scammers exist – and they are very resourceful in finding vulnerabilities. As a cybersecurity expert, I recommend that you use the best technology available to stay one step ahead.


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