How to Avoid Wire Fraud When Closing a Hard Money Loan

To avoid wire fraud at a hard money closing, never send funds to instructions you received by email alone: call the title or escrow company at a phone number you already trust and confirm the account details before every wire. Fraudsters count on speed and pressure, and a two-minute call is the single most effective defense investors have.

Key takeaways

• Treat emailed wiring instructions, and especially emailed changes to them, as unverified until you confirm them by phone.
• Use a phone number you found yourself, such as the title company's website or a prior signed document, never one inside the email.
• Wire a small test amount only if your title company agrees to that process, and still confirm by phone first.
• If a wire goes wrong, contact your bank and report to the FBI within hours, not days.

Why are hard money closings a target for wire fraud?

They move large sums quickly among several parties, which is exactly what criminals look for. Investors often send cash to close, rehab reserves or payoff funds on tight timelines, and urgency makes people skip verification.

The FBI's Internet Crime Complaint Center (IC3) reported in its 2024 Internet Crime Report that real estate fraud losses totaled $173,586,820 for the year, and that business email compromise (BEC) losses reached $2,770,151,146 across all industries. The report also describes a real estate case in which buyers received a spoofed email from a supposed agent asking them to wire $956,342 to finalize a closing. The victims noticed two days later, and the FBI's Recovery Asset Team was able to stop the transfer of $955,060 and return it. Fast reporting made the difference in that case, and not every case ends that way.

How does a closing wire scam usually work?

A criminal gains access to, or convincingly imitates, the email of a real estate professional, lender or title company. They watch for an upcoming closing, then send a message that looks like the real thing with "updated" wiring instructions pointing to an account they control.

The Consumer Financial Protection Bureau describes this pattern in its guidance on mortgage closing scams and in a follow-up post on watching out for closing scams. The consistent advice is to confirm wiring instructions by phone with a trusted contact before sending money, and to be wary of any last-minute change.

Common warning signs include:

• An email that says instructions have changed or that the usual account is "unavailable."
• Pressure to wire today to avoid losing the deal or triggering a default.
• A sender address that is one character off, or a reply-to address that differs from the sender.
• A request to wire to an account in a different name or a different bank than the one you were first given.
• Resistance when you ask to confirm by phone.

What is the safest way to verify wiring instructions?

Call the closing agent directly at a number you obtained independently and read back the account name, account number and amount. Do this every time, even with a title company you have used for years, because the weak point is often a compromised email account, not the company itself.

1. Get instructions early. Ask the title or escrow officer for wiring instructions when you open escrow, not on closing morning. Our guide to title and escrow for investor loans covers what to line up in that first week.
2. Find the phone number yourself. Use the company's website, a prior closing document or the number on your signed contract. Do not use a number in the same email as the instructions.
3. Confirm three things out loud. The exact account name, the account number or its last digits, and the amount due.
4. Match the account name to the closing agent. Funds should go to the title or escrow company handling your file, not to an individual or an unrelated business.
5. Keep the verification on record. Note the date, time and person you spoke with.

Do payoff and draw wires carry the same risk?

Yes. Fraud is not limited to the day you buy. Payoff letters, extension payments and rehab draw disbursements all involve account details that can be spoofed. If a payoff statement arrives from an unfamiliar address or with different bank details than prior correspondence, verify it by phone with the lender or title company before sending funds. Our explainer on title liens and payoff sequencing shows how payoffs fit into closing, and the hard money draw schedule guide explains how rehab funds are released.

How can investors build a closing routine that resists fraud?

Standardize the process so no single email can change it. Investors who close repeatedly benefit most from a written routine.

• Secure your email. Use unique passwords and multi-factor authentication on every account that touches deals, including those of assistants and partners.
• Limit who can approve a wire. Require a second person to confirm any new payee for entity accounts.
• Agree on a communication channel. At the start of each deal, confirm with your lender, title company and agent which phone numbers and contacts are official.
• Know your cash to close. If you already know your number, a surprise request for a different amount stands out. Our guide to how much cash to close you need helps you estimate it, and the hard money loan calculator can help you model costs before you receive final figures.
• Leave time. Many scams exploit last-minute scrambles. Delays that stall funding, covered in what delays hard money closing, are better solved by organization than by rushing a wire.

What should you do if you sent a wire to the wrong account?

Act within minutes. Call your bank and ask for a wire recall and a fraud hold, tell the title company and lender, and file a report with the FBI at ic3.gov.

The IC3 report explains that its Recovery Asset Team can work through the Financial Fraud Kill Chain to ask recipient banks to freeze funds, but the same report notes that in some cases funds were wired out immediately upon deposit. Recovery is never guaranteed, which is why prevention matters more than response.

Frequently asked questions

How do I verify wiring instructions before sending money?

Call the title or escrow company at a phone number you found independently, not one in the email, and confirm the account name, account number and amount before you wire.

What should I do if I already sent money to the wrong account?

Call your bank immediately to request a wire recall, notify the title company and lender, and file a complaint at ic3.gov. Speed matters because funds are often moved within hours.

Can a lender or title company change wiring instructions by email?

Treat any emailed change to wiring instructions as suspicious. Legitimate changes should always be confirmed by a call to a known number.

Are investors with LLCs and large closings bigger targets?

Larger transactions with several parties and time pressure give fraudsters more to exploit, so investors who close often should use a fixed verification routine every time.