There are certain areas where industry and consumer advocacy priorities align seamlessly. Having previously advocated on behalf of mortgage lenders in her official capacity as the Mortgage Bankers Association’s (MBA) first female chairperson, Regina Lowrie now focuses her time and energy on protecting mortgage companies and their borrowers from a sinister shared threat – wire and identity fraud.
Recognizing that consumers and mortgage originators lose billions of dollars every year to cybercriminals, Lowrie founded Dytrix four years ago with the mission of helping lenders better manage their closing agents, as well as to spread awareness about this growing problem.
“I’ve been in the business over 30 years. I had my own mortgage company, so I understand how important a timely and accurate closing transaction is for lenders,” Lowrie told Dodd Frank Update. “Closing is their last interaction with the customer. When everyone shows up at the closing table, and they’re purchasing their first house – it’s the American dream to purchase a home – and the money’s not there, every party in the transaction incurs some loss.”
Lowrie said she is frustrated with the lack of effort by some lenders to verify closing agent qualifications, let alone validating the authenticity of wiring instructions. With that in mind, she has made it her personal mission to educate the industry about what can be done to guard against wire fraud.
“The lender has a financial and reputational risk but, ultimately, it’s the consumer that gets hurt,” Lowrie said.
Another hindrance in the fight to combat fraudsters is the lack of clear protocols from federal regulators, such as the Financial Crimes Enforcement Network (FinCEN) and the Consumer Financial Protection Bureau (CFPB), regarding best practices to root out and prevent wire fraud.
Her solution for offering the type of protection she believes lenders and borrowers need during the mortgage process was to create a customizable closing agent management portal designed to allow lenders to vet closing agents in a secure manner and have the wire instructions validated before transmitting funds through a proprietary process called “Wire Waterfall.” Lowrie relied on her knowledge of how loan transactions work and the office dynamics that can lead to security issues in overseeing the creation of the portal at Dytrix.
The portal is able to validate a closing agent’s identity and bank account information by verifying identifiable information to ensure that the borrower’s data and lender’s money are protected.
Given that federal regulators and industry advocates have made little headway in the push to get Congress to establish a nationwide cybersecurity framework, Dytrix relies on lenders to provide the guidelines by which the company builds a database specifically tailored to their specifications.
“The one thing that’s different about Dytrix is that we do not just have a master database that we’re selling,” Lowrie said. “The portal qualifies closing agents based on the lender’s guidelines. Every lender has a different risk tolerance and the regulators, including the CFPB, say whether a lender can outsource something to a third-party like Dytrix, but that lender has to monitor those outsourced activities and ensure that the third-party is using the lender’s policies and procedures.”
Lowrie has paid particular attention to the trend of fraudsters hacking closing agents’ email accounts and taking over, sending lenders and borrowers with false information, such as phony wiring instructions designed to trick people out of their money and, ultimately, their chance at a new home. She noted that fraudsters often exploit consumers’ lack of familiarity with the mortgage process, and the ill-advised actions of the occasional careless loan officer.
“Anyone who’s been in this business for a while knows that the end of the month is crazy – the loan’s just gotten approved, they’re trying to clear conditions, it gets rushed into the closing department, they’re trying to get the closing package done, etc.,” Lowrie said. “Then the lender gets this email, which looks like it’s coming from the closing agent, so she changes the wiring instructions like the email says. So when everyone shows up at the closing table, the money’s not there.”
On occasions where a fraudster’s plan works, the money rarely is recovered. Fraudsters often immediately transfer ill-gotten funds to overseas accounts, where they become exceedingly difficult to trace.
FBI Supervisory Special Agent Holly Easter Kelley told attendees at MBA’s 2019 annual convention in Austin, Texas, that the likelihood of recovering money stolen from buyers diminishes exponentially with each passing hour after a wire transfer is sent to a fraudster.
The FBI’s Internet Crime Complaint Center (IC3) recorded more than $2.7 billion in losses related to cybercrimes in 2018, a significant uptick from 2017 when it recorded more than $1.4 billion in losses. From 2014 to 2018, the agency tracked $7.45 billion in losses from cybercrimes.
With that in mind, Lowrie explained the importance of quashing such schemes before any action is taken by the borrower or the lender. That can be done by referencing national databases to verify borrower account numbers, account owner identities, business tax identification numbers and that the intended recipient of funds is correct – something her company’s portal does automatically.
“We’ve been able to identify and stop fraud with our clients on wires that would have otherwise gone out,” Lowrie said.
The portal also verifies the location of the intended recipient by performing a domain check and a country check, so the lender can tell if the emails they believe are coming from the closing agent actually are coming from outside the U.S. The portal also is designed to provide fraud and abuse alerts and refer users to the Treasury Department’s Office of Foreign Assets Control’s (OFAC) checklist for guarding against inadvertently conducting prohibited transactions with certain persons and organizations listed as “Terrorists” and “Specially Designated Persons and Blocked Persons.”
She touted the portal’s efficiency, stating that it can return results for individual queries in less than 30 seconds and for batches of up to 1,000 queries in under 10 minutes.
She noted that even companies that make a point to manually call closing agents to verify wiring instructions are not immune to fraud, because if a criminal has taken over a closing agent’s email, the phone number with the fake wiring instructions would be fraudulent as well.
“I think that based on my background and my reputation, being a former chairman of MBA, I think I have voice that will be heard and I’m passionate about this issue for a number of reasons,” Lowrie said.