By Jill Bright | Guest Author Diana Hoffman | Chicago Title
All out-going wires sent from our company’s escrow trust accounts must be approved by two authorized bank signers before they are sent to our accounting dept. We require two approvers to review the wire for accuracy against the source document before sending it out as an added layer of protection.
Here is how the process works: The person sending a payoff wire verbally verifies the wire instructions at a known trusted phone number and documents when and who they spoke to so anyone looking at the file knows the wire was verified.
Next, the demand is read thoroughly to ensure the full amount necessary to pay the loan is being sent. Then they ensure the file is fully funded and will not be overdrawn by the disbursement. Finally, the wire-up is set up in the system. Once the wire has been set up, a second bank signer is required to verify all the same items and confirm the information entered is correct. They must also ensure the routing and account number are correct then make certain the correct loan number and borrower name is referenced before approving the wire to be released to accounting.
Once the approved outgoing wire request is received by our accounting dept, they too will verify the wire instructions. Next, they read through the demand to ensure the wire will pay off the loan per the written demand or estoppel. Accounting verifies the routing and account number are correct against the demand then also checks the correct loan number and borrower name is referenced. When each person does their part, the process protects the Company and ultimately our customers.
Recently, one of our offices ordered a payoff demand from a mortgage company. The demand was ordered on April 25, 2022, and was received on April 27, via email. This payoff included wire instructions to a bank in New York. On May 2, 2022, an amended demand was received which included an increase in the number of trust funds advanced by the mortgage company. The original demand reflected an increase in advanced funds in the amount of $103.72, and the new amount was $207.72. No other amounts on the demand changed. However, on May 4, 2022, the office received an “updated” demand via eFax. Unknown to the office, this “updated” payoff had altered banking information to send funds to a bank in California rather than the bank in New York.
The file closed and the wire was set up and approved at the branch then sent to accounting for processing. The wire transfer was in the amount of $149,546.13. Accounting reviewed the wire. They compared the wire instructions against the payoff demand and the Company’s repetitive wire list. However, they did not find a match, so they combed the escrow branch file looking for evidence the wire instructions were verified at a known trusted number but did not find it. The wire request was returned to the branch. The branch contacted the mortgage company who confirmed the payoff demand had been altered but had no record of that payoff demand having been set by their office on May 4, 2022.
Our accounting team followed the Company’s standard operating procedure which proved once again to be our best defense against wire fraud. So never skip a step and be sure to completely review each demand for discrepancies. Any changes should always be verified before proceeding.
Our Company is trained to detect and prevent fraud which ultimately protects you! Always call to verify wiring instructions.
Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
FNTG/National Escrow Administration