It’s hard to believe that it has already been one year since Alliant National and our technology partners launched SecureMyTransaction in response to the urgent need for robust, scalable fraud prevention and identity verification tools. Over the last year, many of you have provided feedback on our service, and I am humbled by the stories I’ve heard about how SecureMyTransaction has helped defend against fraud. Seller impersonation, vacant property fraud, wire fraud, and deed and document forgeries are deeply damaging to our industry and the consumers we serve, and I sincerely thank you for your valuable input.
Thanks in large part to your help and support, I am proud to share two significant updates regarding SecureMyTransaction.
First, the American Land Title Association (ALTA) has announced today that SecureMyTransaction has achieved ALTA Elite Provider status. As part of that process, SMT was rigorously vetted as a provider and received recommendations from ALTA members. This designation is an important milestone and affirms SMT’s effectiveness in helping agents respond to increasingly sophisticated fraud schemes.
Second, we’re excited to announce that this week, SMT is being updated to include new features allowing you to customize the user experience with your branding, the branding of your real estate partners, and even lenders. This includes incorporating your logos, contact information, and messaging for a seamless, integrated ID verification experience that reflects your unique business style. With this added ability to customize the platform, SMT not only offers protection but also supports brand visibility and business growth.
We remain committed to growing and enhancing SecureMyTransaction, and your feedback will guide our efforts. You can also follow updates at SecureMyTransaction.com.
If you have thoughts or questions about SecureMyTransaction, please reach out to me or any member of our team.
The economy remains on track as we head into the closing months of 2024, with inflation subsiding under the Federal Reserve’s tight management and employment remaining surprisingly resilient, though softening in recent months.
On the real estate front, high interest rates and low inventory have stymied the industry, with new single-family home sales plunging 11.3% in May and existing sales falling to an annualized rate of 3.89 million in June, a two-month period that normally sees accelerated buying trends.
The hoped-for rate cuts by the Federal Reserve that might have given the market a boost in the coming months have not materialized, with Treasury Secretary Jerome Powell announcing on July 31 that the federal funds rate would stay put at 5.25-5.5% for the near term, while holding out hope that there may be some downward movement before years’ end.
“FOMC participants wrote down their individual assessments of an appropriate path for the federal funds rate, based on what each participant judges to be the most likely scenario going forward,” Powell said in his report. “If the economy evolves as expected, the median participant projects that the appropriate level of the federal funds rate will be 5.1% at the end of this year, 4.1% at the end of 2025, and 3.1% at the end of 2026. But these projections are not a Committee plan or any kind of a decision.”
In his comments, Powell acknowledged that while the Fed is not yet confident enough to pull back from their efforts to control inflation, reducing policy restraint too late or too little could have an undue negative impact on economic activity and employment. That fear seemed to come to fruition when the July jobs report came in weaker than expected, sending Wall Street into a tailspin on August 2nd as fears of recession escalated in the financial community. However, markets have largely recovered since that drop.
In a reaction to the U.S. Commerce Department report on Q2 GDP, MBA SVP and Chief Economist Mike Fratantoni acknowledged several components in the report indicating a potential slowdown for the economy but also pointed to positive signs in the recent inflation data that he hoped “would provide enough confidence for the Federal Reserve to cut rates in September.”
While that remains to be seen, consumer confidence, interest rates, home sales, and new home construction remain in limbo, subduing hopes for any substantial real estate boost this year.
Consumer confidence shows signs of improvement
Dana M. Peterson, Chief Economist at The Conference Board, said that consumer confidence increased in July but remained in a narrow range that has prevailed over the past two years. “Even though consumers remain relatively positive about the labor market, they still appear to be concerned about rising prices and interest rates, and uncertainty about the future; things that may not improve until next year,” she said.
Interest rates staying put
It remains to be seen if a slowing economy will kickstart a movement towards lowering fed funds rates in the near term, but interest rates have remained in the sub-7% range this summer after reaching 8.5% in October 2023. According to the Freddie Mac economists’ July outlook, interest rates are expected to stay above 6.5% through the end of the year. Fannie Mae is also forecasting interest rates to remain at 6.8% through the end of the year, falling back only slightly to 6.4% in 2025, leaving little hope for the recovery that was so optimistically anticipated at the outset of the year.
Home price growth could pull back
According to the July 2024 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group, home price growth in the second quarter was stronger than previously anticipated but will likely moderate soon, closing 2024 and 2025 at annual rates of 6.1% and 3.0%, respectively. The CoreLogic HPI Forecast concurs, indicating in its July report that home prices are expected to rise only 3% on a year-over-year basis from May 2024 to May 2025.
New home sales soften, existing home sales improve slightly
According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes in June fell 0.6% to a 617,000 seasonally adjusted annual rate from a slight upwardly revised reading in May. The pace of new home sales is down 7.4% from a year earlier.
Jing Fu, NAHB director of forecasting and analysis, reported in July that new home inventory in June remained elevated at a 9.3 months’ supply.
“At the current building pace, there is still a long-run need for more construction because existing inventory remains relatively low,” he said. “Due to a lack of resale homes for sale, the combined inventory for new and existing single-family homes remains lean at a 4.7 months’ supply, according to NAHB estimates.”
After a lackluster May and June, pending home sales rose 4.8% in June, according to the National Association of Realtors, but the numbers remain low compared to past years.
Broader outlook murky
Across the board, economic and housing forecasts remain tentative and conservative, as economists keep an eye on a host of uncertain elements, including the volatility of the global economy, the Federal Reserve’s tight fiscal policy, a jittery stock market, and an era of consumer pessimism. However, should the Federal Reserve begin interest rate cuts in September as hoped for, many of these issues could ease considerably, opening the door for a more promising final quarter.
SecureMyTransaction from Alliant National is reshaping fraud prevention in real estate. Listen in as Alliant National Risk Management and Data Privacy Officer Tom Weyant, and Jerome Magana with Select Specialty Insurance, discuss how cutting-edge technologies and business insurance coverages work together to help you safeguard transactions, protect clients, and preserve your business.
VP, Risk Management and Data Privacy Officer CQA, CFE American Society for Quality (ASQ®) Member Association of Certified Fraud Examiners (ACFE®) Member d: 303.682.9800 x530 | c: 720.534.6235 e: tweyant@alliantnational.com
Calling cybersecurity “the ultimate team sport,” the FBI’s Internet Crime Complaint Center (IC3) emphasized its ongoing commitment to working with local law enforcement and private industry to combat evolving cyber threats in the U.S. in its recent 2023 Internet Crime Report.
The report, released in March, highlighted investment fraud and business email compromise (BEC) fraud as the two most expensive fraud types in 2023, with investment fraud increasing from $3.31 billion in 2022 to $4.57 billion in 2023 — a 38% increase, and BEC logging 21,489 complaints amounting to $2.9 billion in reported losses.
“Today’s cyber landscape is threatened by a multitude of malicious actors who have the tools to conduct large-scale fraud schemes, hold our money and data for ransom, and endanger our national security,” the FBI noted in its executive summary. “The FBI continues to combat this evolving cyber threat. Our strategy focuses on building strong partnerships with the private sector; removing threats from U.S. networks; pulling back the cloak of anonymity many of these actors hide behind; and hitting cybercriminals where it hurts: their wallets, including their virtual wallets.”
IC3’s Recovery Asset Team (RAT), established in 2018 to facilitate the freezing of funds involved in cybercrime, was able to initiate the Financial Fraud Kill Chain (FFKC) on 3,008 incidents in 2023, with potential losses of $758.05 million. A monetary hold was placed on $538.39 million, representing a success rate of 71%.
In its report, the FBI emphasized the importance and value of victims reporting cyber incidents to IC3.
“Your reporting is critical for our efforts to pursue adversaries, share intelligence with our partners, and protect your fellow citizens,” the FBI noted. “Cybersecurity is the ultimate team sport, and we are in this fight together.”
For professionals involved in real estate transactions, RAT is a significant ally, as the organization has developed the deep insight and resources needed to identify, track and convict cyber criminals.
By creating a strong liaison between law enforcement and financial institutions, RAT is able to assist in the identification of potentially fraudulent accounts, stay at the forefront of emerging trends, and foster a symbiotic relationship where information is shared.
New concerns emerge
The IC3 report noted increasing concern for situations where fraudsters prompt victims to send wires directly to third-party payment processors. Funds are quickly dispersed in such cases, making it more difficult to recover the money.
The FBI is also seeing an increase in fraudsters using custodial accounts at financial institutions or cryptocurrency platforms, where the funds are quickly swallowed up.
“With these increased tactics of funds going directly to cryptocurrency platforms and third-party payment processors or through a custodial account held at a financial institution, it emphasizes the importance of leveraging two-factor or multi-factor authentication as an additional security layer,” the agency noted. “Procedures should be put in place to verify payments and purchase requests outside of email communication and can include direct phone calls but to a known verified number and not relying on information or phone numbers included in the email communication.”
Other best practices include:
Carefully examining the email address and URL
Reviewing the wording and spelling in the correspondence
Refraining from clicking on links requesting you update or verify account information
Refusing requests to supply login credentials or personal information via email
Training employees on the red flags of fraud
Providing staff with ongoing training on how to handle suspected fraud
Wire fraud guidance
As in past years, the FBI reminded real estate professionals involved in wiring funds to put in place strict verification measures should a wire change be requested during the course of a transaction.
In addition, the FBI emphasized the critical need for title agents who are victims of wire fraud to act quickly when the fraud is detected, advising they contact the originating financial institution to request a recall or reversal and a Hold Harmless Letter or Letter of Indemnity.
They also encouraged victims to file a detailed complaint with www.ic3.gov providing as much data as possible to broaden the organization’s ability to track cybercriminals.
Ransomware on the rise
Ransomware incidents were also on the rise in 2023, with 2,825 complaints reported and losses up 74% from $34.3 million to $59.6 million.
In its report, the FBI emphasized that it does not encourage paying the ransom since it will effectively embolden criminals to target more victims.
“Paying the ransom also does not guarantee that an entity’s files will be recovered,” the FBI reminded. “Regardless of whether you or your organization decided to pay the ransom, the FBI urges you to report ransomware incidents to the IC3. Doing so provides investigators with the critical information they need to track ransomware attackers, hold them accountable under U.S. law, and prevent future attacks.”
Light Gray Divider Line
At Alliant National, we are committed to keeping you updated on the latest cybersecurity threats and providing you and your staff with information and tools to help protect your customers and your agency. SecureMyTransaction from Alliant National is an advanced fraud prevention solution built exclusively for independent title professionals. The system helps agents avoid risks posed by wire fraud, identity fraud and vacant property fraud by automating the information you need to move transactions forward with confidence. SecureMyTransaction leverages AI technology that covers and crosschecks:
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking (NPRM) on Feb. 7 to expand its efforts on a permanent basis to combat and deter money laundering through the residential real estate sector.
According to the FinCEN announcement, the proposed rule would require professionals involved in real estate closings and settlements to report information to FinCEN about non-financed transfers of residential real estate to legal entities and trusts.
“Illicit actors are exploiting the U.S. residential real estate market to launder and hide the proceeds of serious crimes with anonymity, while law-abiding Americans bear the cost of inflated housing prices,” said FinCEN Director Andrea Gacki. “Today marks an important step toward not only curbing abuse of the U.S. residential real estate sector but safeguarding our economic and national security.”
Expansion of GTO efforts
Since 2016, FinCEN has issued multiple Geographic Targeting Orders (GTOs) requiring title insurance companies to file reports on all-cash purchases having specific dollar thresholds in designated geographic areas. These GTOs last for six months at a time. The most recent GTO was issued in October 2023 and expanded the list of affected venues.
According to FinCEN’s proposed rule, expanded reporting requirements would apply on a permanent basis across the entire country, without limit to specific geographic locations or a dollar threshold. The agency will accept comments on the new proposed rule for a 60-day period following its publication in the Federal Register, scheduled for Feb. 16. According to the American Land Title Association’s (ALTA) blog of Feb. 8, FinCEN has proposed that the final rule become effective one year after it is issued.
“We are still reviewing the proposed rule and will work to ensure that FinCEN considers the information they are collecting under the new Beneficial Ownership rule, among other things, so as not to be unnecessarily duplicative and also provide clarity regarding the obligations of all real estate parties under the rule,” said Diane Tomb, ALTA’s chief executive officer. “We also appreciate, and intend to continue, the ongoing dialogue with FinCEN to craft a tailored approach limiting the transactions that must be reported to those of the greatest concern and providing avenues to help reduce the compliance burden on title and settlement companies.”
Proposed reporting structure
The proposed rule would require reporting on transfers of single-family houses, townhouses, condominiums, and cooperatives, as well as buildings designed for occupancy by one to four families. Going a step beyond the GTOs, it would also require reporting on transfers of vacant or unimproved land that is zoned, or for which a permit has been issued, for occupancy by one to four families. Furthermore, both purchasing entities and transferee trusts are reportable unless a specific exception is applicable.
ALTA’s Feb. 8 blog summarizes reportable information under the proposed rule to include (but is not limited to) the following:
Name, address and taxpayer identification number (TIN) for the transferee and transferor.
Beneficial owner information for the transferee and anyone signing the transfer documents. (names, date of birth, addresses and TINs for those individuals).
Name, DOB, address and TIN for all transferors on title or the beneficial owners if the seller is an entity.
Address and legal description of the property.
information about the payments made by or on behalf of the transferee.
Information about any hard money or other lender not subject to anti-money laundering rules. That participated in the deal.
Individuals representing the transferee entity or transferee trust.
The business filing the report.
For a more detailed summary of requirements and exceptions under the proposed rule, please see the Fact Sheet published by FinCEN. At Alliant National, we are committed to keeping you updated on legislation and regulations that affect your business. Stay tuned for more, as the comment period progresses.
