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KASS: Scammers take money from HELOC

DEAR BENNY: I just read your article regarding whether or not to have a home equity line of credit (HELOC) and you highly recommended it. I would like to share a situation that occurred to us where I don’t feel that is the best idea.

We had “bad guys” access our HELOC by doing a little social engineering. They went to public records, copied my husband’s signature, called the bank to see how to do a transfer – what would be involved – then hijacked our phone to call-forwarding to a “burner phone,” and when the bank called to verify that it was my husband requesting the transfer, they got the bad guy instead of my husband. They did all this in less than two days and got $230,000! I happen to check my bank account frequently and found it the same day it happened and, since it was late, emailed the bank that night, and called the bank first thing in the morning. They told me “my husband had requested the transfer.” Since my husband was with me all day, and never does the banking or goes to the bank, they would not have known his voice, but later they said that the perp had coughed a bit and said he had a cold. It also is noted that we had called the phone/cable company the day before as our phone was ringing once and then no one was there, though we could call out, and we found out the phone had been forwarded without our knowing. After the FBI got involved, security at the bank reviewed all of the IP addresses from Comcast, but they were not able at that time to find the perps and the money had already been wired immediately that day to South Korea. The same perps tried to do the same thing at the same bank two days later, but the bank had already changed their procedures after our event. It was also tried two weeks later at a bank 30 miles from here. On researching, it seems the credit unions had known of this scam for at least five years prior. Anyway, the bank wound up reimbursing us the money and they took the hit, but it was a scary lesson for us. I shred all information that comes to the house, have a locked mailbox, and actually never received any mail regarding this line of credit. The curious thing is how they knew we had that much “untapped” money available. We had $250,000 but they “only” took $220,000.

Anyway I thought you should be aware there is a downside to this. Perhaps this is rare, but apparently pretty lucrative. – Name withheld on request

MY RESPONSE:   First, I will never use a question unless my readers provide me with their name. However, I will honor a request not to use the name in my columns.

This reader was scammed, and I understand her concerns. However, she did get all of her money back, since the bank made the foolish mistake of relying on a telephone conversation.

Nevertheless, I still strongly recommend every homeowner have a HELOC. It is “money in your desk drawer.” You don’t pay any interest until you draw on the loan. One never knows when an emergency will occur, so it’s a good – and comfortable – feeling to know that you can just write a check immediately, instead of having to rush around finding cash.

If other readers have had problems with HELOCs, please let me know so I can alert everyone. And the reader made a very excellent suggestion: Check your bank statement as often as possible.

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Benny Kass is a practicing attorney in Washington, D.C. and in Maryland. He is not providing specific legal or financial advice to any reader. He wants readers to e-mail him, but cannot guarantee a personal response. He can be reached at: mailbag@kmklawyers.com.


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