Encrypting or Securing Emails in Real Estate Transactions is Imperative
In 2010 the Dodd-Frank Act created the Consumer Finance Protection Bureau (CFPB) for the purpose of supervising and regulating parts of the financial services industry. The role of the CFPB developed to include providing guidelines to the financial services industry which would protect consumers from excessive risk. One identifiable risk that stemmed from the CFPB’s regulation deals with the dissemination of Non-Public Information (NPI).
The mortgage industry’s compliance with the CPFB’s regulations can reasonably be expected to extend to third parties in receipt of such information. There is a considerable agreement in the real estate legal community that the closing attorney has a duty to safeguard NPI against unauthorized circulation. For this reason, most law firms have adopted policies regarding information security. This security typically extends to email messages.
If an email message contains enough information that an identity can be discerned and NPI be revealed, the best practice for the law firm sending that email would be to send the email securely. As the majority of the emails from a closing attorney’s law firm involve not-yet-public homes sales, most emails from that firm should be sent in an encrypted fashion. Real Estate agents should consider safeguarding their client’s information as well. While a follow-up question or reply to an email may not contain NPI, the previous messages below the immediate conversation may contain NPI, so the encrypted nature of the communication should be preserved. It is also important to remember that emails received in a secure fashion should only be forwarded to authorized parties – securely.
The State Bar has sent a notice to attorneys recently, warning us to be extra cautious because there are skilled hackers in cyberspace that have successfully hacked into emails strings that contained a request for wiring instructions. Because these hackers have been able to successfully answer enough questions to make someone believe they are the entitled wire recipient, the closing attorney’s office should always confirm the wiring instructions with the recipient in person or initiate the call to the seller to confirm they get the funds entrusted to them to the right party.
Published by John F. Renger on August 23, 2016