Last-Minute Wire Change, Revised Closing Disclosure, and a Friday Closing
Closing is Friday. Buyer’s lender emails a revised Closing Disclosure Thursday at 3:00 p.m. showing cash to close $8,450 higher because of a 0.375% loan-level price adjustment. The escrow agent emails wiring instructions for an account named “Summit Title Services LLC,” but the domain is “summittitle-services.com” instead of the company’s usual “summittitle.com.” Buyer’s assistant calls the escrow officer at the number on the notepad and leaves a voicemail. At 4:40 p.m. buyer wires $92,300 to the account. On Friday at 9:00 a.m. the escrow officer says the wire never arrived; the account is fraudulent. Seller refuses to delay closing. Buyer’s rate lock expires Monday, and buyer has a rent-back obligation starting Saturday. The purchase agreement makes time of the essence; the lender will not fund until title confirms receipt; the title company has a $1 million cyber policy.
1. What red flags should the buyer and escrow agent have identified, and what verification steps were required?
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The domain “summittitle-services.com” differs from the known “summittitle.com”; that is a classic business-email-compromise red flag. The wiring instructions arrived by email at the last minute, and the buyer’s assistant only left a voicemail instead of speaking to a known escrow officer. The revised Closing Disclosure also increased cash to close by $8,450 on the eve of closing, which required review and proper timing. The buyer should never rely on contact information in the suspicious email. The correct steps are to call the escrow officer at a previously verified number, confirm the account name and number orally, use the title company’s secure portal, and require dual approval for wire changes. The escrow agent should have sent instructions through an authenticated system and warned the buyer about wire fraud.
2. Who likely bears the loss, and what immediate actions should be taken?
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The buyer generally bears the loss if the buyer voluntarily wired funds to a fraudulent account, because the escrow agent did not receive the money. The escrow agent may be liable only if it breached a duty-for example, by sending unsecured or altered instructions. The title company’s cyber policy and the banks’ fraud-recovery processes may help, but recovery is not guaranteed. Immediate steps: call the sending bank to request a recall; call the receiving bank; report to the title company’s insurer; file an FBI IC3 complaint; preserve all emails and headers; and notify the lender and real estate broker. The buyer should not send a second wire until the first is traced and the correct account is verified. The closing should not occur without confirmed funds.
3. How should the closing be handled given the timing, rate lock, and rent-back obligations?
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The revised Closing Disclosure delivered Thursday at 3:00 p.m. for a Friday closing likely violated the three-business-day review rule if the increase was not within tolerance. The lender should re-disclose and the closing should be delayed unless the buyer signs a valid waiver, which may not be available for a higher cash-to-close amount. The seller’s refusal to delay does not override the lender’s requirements. The buyer should ask for a rate-lock extension, negotiate a short delay, and document the rent-back. If the seller declares default, the buyer can argue impossibility or frustration caused by fraud and lender timing. The escrow agent should hold the closing until good funds are verified. A certified check or wire from a verified account may be used, but only after confirmation.