by Anthony Gilbert The RealFX Group
Mortgage wire fraud is a serious problem, and one that every buyer, real estate brokerage, and mortgage company wants to avoid dealing with. This is also true of sellers, who can see their deals fall through when the buyer of their home is swindled out of money. With that in mind, there are several ways to reduce the chances of mortgage wire fraud. One of those is blockchain, which can solve a lot of financial risks and concerns when handled properly. Because blockchain offers a different way to keep a record of digital transactions, it is irrefutable, secure, and protected. Here is what buyers and sellers should know about this relatively new concept.
What is Blockchain, Really?
Blockchain is a digital currency transfer recording system. It allows for asset transfers, and because the chain is tamper proof and completely secure there is no way that something can get lost in the shuffle of moving things from one place to another. By using a payment processing service and then underpinning it with blockchain, the payment can be tracked at every step from one place to another. That is good news for buyers and sellers, as well as mortgage companies and real estate brokerages. By being able to clearly see where the money always is, blockchain makes it safe for money to be transferred without worry.
But blockchain is not a payment processing system itself. Other systems still have to be used in conjunction with it. Being able to promise trusted transactions is a big deal for anyone who needs to move a lot of money around, or who needs to be responsible for their part in a serious financial transaction. That is where blockchain has a high level of value, because feeling secure is important. Providing peace of mind is a great marketing strategy, as long as a company can back that up. Blockchain can, and that is where they are making their mark in industries like real estate and other high dollar niches.
Can Blockchain Change the Industry?
Whether blockchain will change the industry remains to be seen, but there are plenty of indications that it will have a big impact on buyers and sellers, along with mortgage companies and real estate brokerages. Because of the security that blockchain provides, it is easy to see why it might be highly desirable to have in any and all real estate transactions. By getting blockchain as a part of the standard way of doing business, real estate brokerages and mortgage companies will be better able to protect themselves and their customers from mortgage wire fraud and related kinds of problems, as well as helping create smart documents when it comes to dealing with any paperwork involved in the transaction. It may not be possible to protect everyone until blockchain is the norm, so working within the current industry climate to help everyone have a successful mortgage transaction is very important.
How Can Buyers Protect Themselves?
One way buyers can protect themselves from mortgage wire fraud is to use blockchain. But if that is not an option there are other choices/precautions to consider. One of those is to always follow up when contacted to wire money for a mortgage. Often, title companies will contact the buyer and ask that they bring a cashier’s check to the closing table. If they do not live in the area, though, they may be asked to wire money. When that happens, the buyer needs to be certain they are wiring the money to the right place and in the right amount.
When the buyer calls their lender, they want to use the number they were provided with on their original documents, or the number they find by looking for the company online. They should never call a number they were given in the wire transfer request, because that number may be fraudulent. By doing their due diligence, buyers can be more secure in wiring money for their mortgage. While blockchain may be the way to go in the future, it is also not in widespread usage yet. Until it becomes the norm for all mortgage and real estate transactions, buyers will need to be sure they are taking care to reduce risk and worry.
Anthony Gilbert is the owner of The RealFX Group. Anthony specializes in real estate marketing, and is interested in industry solutions that new technologies bring to the table.