Fishing can be fun and relaxing, but nowadays if it is spelled phishing, it is anything but. Wikipedia defines phishing as “the attempt to obtain sensitive information such as usernames, passwords, and credit card or account details (and, indirectly, money), often for malicious reasons, by disguising as a trustworthy entity in an electronic communication.” And phishing is exactly what is happening to multiple real estate brokers, escrow companies and private money lenders all across the state. This has to do with misdirected wires and fundings due to hackers intercepting and directing funds to a bogus account and it is, unfortunately, happening more and more frequently. You MUST protect yourself and your clients’ funds from these ever-growing schemes.

I recently heard about a private money broker in Northern California who was conned out of $1,000,000 due to this
practice and I received the following from a broker-controlled escrow company in Southern California just as I started to write
this article:

“We have a wire fraud issue. Our escrow officer was tricked via e-mail hacking (not sure if it was us or the title company who got hacked) to stop payment on a check and wire the funds into a bank account instead. The e-mail was fraudulent. The bank she wired into was fraudulent. This was two weeks ago and we have since then opened insurance claims, reported to the police, FBI, etc. The wire was for $1,321,763.02. This morning the bank recovered $601K. We are sending this to the seller today. My question to you is how do I enter this into the accounting software, or do I?
“This is a closed escrow or is it? Since the seller never received his funds? Do I receipt in the $601K or do it all outside of the software?
“Basically I am just asking how to show this in the accounting software.”

What a sad and frightening thing to happen (and I must say that the company that was phished is one of the best-run companies that I know, with some of the brightest, most conscientious escrow officers that I have ever encountered)! What would YOU do if this happened to YOUR company? Greg Parham, Attorney and Operations Manager for First Alliance Title, wrote an excellent article late last year regarding this very thing and offered advice for how to prevent it from happening to brokers and companies. His advice included securing your e-mail account, don’t open spam, phone for routing numbers (don’t rely on e-mailed instructions), have good firewall protection, and have the client always sign a printed verification of wiring instructions.

He also suggested that if you want more ideas on protecting against wire fraud and these phishing scams you should read the following: www.crowdreviews.com/blog/protect-clients-real-estate-wiretransfer-fraud/

Reports, Reports, and More Reports
I recently had a conversation with Chika Sunquist, the head of Mortgage Loan Activities for the CalBRE (soon to be the DRE
again, we hear), and the discussion centered around reporting, especially the Trust Fund Status reports (quarterly and annual). It seems that some of the constant issues that the CalBRE encounters is an inaccurate or delinquent reporting. Numbers not making sense and not adding up and reports being sent in late. Neither of these is acceptable and can trigger an audit. Please be more diligent in the accuracy and timing of these reports. If you aren’t sure how to complete the reports or have problems knowing when the reports are due, ask! You can call the CalBRE, your attorney, your consultant, or your CPA. Someone can help you get these done right and on time. You will be glad you did.

When a Name by any other Name is not the Same
Make sure that you are using your exact company name or registered dba on all documents, advertising, brochures, websites, business cards … well, everywhere. A client was recently cited by the CalBRE for not using “Inc.” on the end of their company
name (when the actual licensed name did include “Inc.”) and another was cited for abbreviating the name of their city (let’s,
for example, say that the actual licensed name was “My Mortgage Company of Isla Vista” and they had documents that showed “My Mortgage Company of IV”). When it comes to names, the CalBRE insists on exactness.

Pam Strickland is a compliance consultant from Santa Barbara. She can be reached at pam@pamstrickland.com for help preparing for and surviving CalBRE audits.