- Last week, Fidelity was hacked and, as a result, all of its closings have been shut down.
- As of this writing, it does not appear that it has resumed its closings.
- This should definitely be a wakeup call to all commercial real estate companies to protect themselves as much as possible.
I have written many times before about title insurance in this blog. Indeed, we are title fee attorneys. Well there was very big news in the title insurance world last week that kind of went under the radar. Fidelity National Financial was hacked. Its not totally clear what happened or how bad it is, but as of the middle of this week, it did not appear that it had started closing deals yet. This is, obviously, very scary. So lets talk about it.
The Fidelity Hack
The recent cyberattack on Fidelity National Financial (FNF), a leading provider of title insurance and mortgage services, sent shockwaves through the commercial real estate industry. This unprecedented event disrupted operations, delayed closings, and raised concerns about the vulnerability of critical infrastructure. As the industry grapples with the aftermath, it’s crucial to understand the implications of this attack and take proactive measures to safeguard against future threats.
On November 21, 2023, FNF disclosed that it had suffered a cyberattack, prompting an investigation by law enforcement and cybersecurity professionals. The company took immediate steps to contain the incident and safeguard its systems, but the disruption caused significant delays in title insurance and mortgage transactions.
On November 22, the ALPHV/Black Cat ransomware group claimed responsibility for the attack, allegedly demanding a substantial ransom payment in exchange for decrypting stolen data. FNF has not publicly disclosed whether it paid the ransom or not.
As of November 26, FNF alleged that the cyber attack was now “under control.” Its not clear what that means. It does not appear that all of its title business is back up and running. The disruption had caused widespread delays and uncertainty in the commercial real estate market.
Impact on the Commercial Real Estate Industry
The Fidelity Title hack serves as a stark reminder of the interconnectedness of the commercial real estate industry and the potential for cyberattacks to cause widespread disruption. The attack highlighted the following key risks:
- Delayed Transactions: Title insurance is a critical component of real estate transactions, and any disruption in its issuance can cause delays in closings. This can lead to financial losses for buyers, sellers, and lenders, as well as reputational damage for real estate professionals.
- Data Breaches: Cyberattacks can expose sensitive customer data, including personally identifiable information (PII) and financial details. This can lead to identity theft, fraud, and other financial losses for affected individuals.
- Ransomware Attacks: Ransomware attacks can encrypt critical data, rendering it inaccessible until a ransom is paid. This can bring business operations to a standstill and result in significant financial losses.
What does this Mean for the Commercial Real Estate Industry
In the wake of the Fidelity Title hack, commercial real estate professionals need to be aware of the dangers and risks from hackers and potentially follow these steps to enhance cybersecurity and mitigate some risks.
- Strengthen Cybersecurity Measures: First, I want to say that this is way outside my area of expertise. I am not a cybersecurity expert by any stretch. So don’t take my advice – PLEASE talk to your IT experts. But having said that, commercial real estate companies need to make sure they implement robust cybersecurity measures, including multi-factor authentication, data encryption, and regular system updates. And conduct regular security assessments and penetration tests to identify and address vulnerabilities.
- Educate Employees: Train employees on cybersecurity best practices, including phishing awareness, password hygiene, and social engineering techniques. Encourage them to report suspicious activity promptly.
- Seek Expert Guidance: This is by far the most important aspect. Don’t listen to me – a real estate lawyer. Talk to someone who knows what they are doing. And if you need a recommendation, I have a great referral.
Again, this last section is outside the area of my expertise. But its clear that this is a scary development. When a huge title company can be hacked and have its closings completely shut down, its certainly time for real estate developers and investors to take notice. And take precaution.