Fidelity National Financial, the parent company overseeing major entities such as Chicago Title, has enforced a shutdown of title and escrow services in the wake of a security breach investigation.
In response to a security breach, the company has implemented a block on access to critical systems, including those related to insurance, escrow, mortgage services, and technology.
As the company investigates the security incident, it is actively assessing whether the breach had a material impact on its operations.
And to make matters worse for the company, following the security breach revelation, shares of Fidelity National Financial have experienced a 3% decline in post-market trading, reflecting investor concerns about the potential consequences of the incident.
In an SEC filing on November 21, 2023, Fidelity National Financial revealed the suspension of systems integral to “title insurance, escrow and other title-related services, mortgage transaction services, and technology to the real estate and mortgage industries.”
Headquartered in Jacksonville, Florida, Fidelity National Financial manages Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title, and National Title of New York. The company, committed to swift resolution, initiated an investigation, engaged external cybersecurity experts, and informed law enforcement agencies.
The SEC report stated, “Based on our investigation to date, FNF has determined that an unauthorized third party accessed certain FNF systems and acquired certain credentials. We are working diligently to address the incident and to restore normal operations as quickly and safely as possible.”
Buyers set to finalize transactions this week have been informed that the system will remain inaccessible until Sunday, causing complications for scheduled closings. San Francisco broker Kate Fomina shared her experience, reporting that the escrow company, Chicago Title, communicated a security breach and system-wide shutdown.
Fomina’s clients, expecting to close on Wednesday, now face delays, with the system anticipated to be offline until Sunday. This disruption has left buyers in a challenging position, making mortgage payments for properties they don’t officially own.
“I got a call from the escrow company, Chicago Title,” Fomina told Real Estate News. “They told me there was a security breach and because of that they have to shut down the whole system, all over the country,” she said. “The closing system is down at least until Sunday. They can’t send any wires, can’t release for recording.”
“The bank already funded the loan,” Fomina said of her buyers waiting to close. “So my buyers are paying a mortgage already on a home they don’t own.”
Fomina also opened up about her interactions with an escrow officer at Fidelity National Financial. “She told me that if we cannot close for another week, escrow will assume all the mortgage payments that my buyers have to make,” Fomina said.
And as for looking to the future, Fomina speculates that: “they might try to do it old school. I just don’t know, we’ll have to figure that out.”
For Fomina, her buyers aren’t urgently trying to move, which gives her some space for wiggle room. “Thankfully that is working out,” she concedes.
But she acknowledges that other buyers may not have this grace period, and could be in real trouble following the hack. “What about people doing a 1031 exchange or who need money in order to buy something?” Fomina asked. “Dates really matter.”
Fidelity National Financial has yet to respond to additional inquiries, leaving affected parties uncertain about potential workarounds or the duration of the service interruption. As real estate professionals and homebuyers navigate this unexpected setback, the urgency to find solutions grows, especially for those with imminent plans to close transactions during Thanksgiving week.