Another Borrower Taken for $10,000 by Upfront Loan Free Scam

“Why can’t you qualify for a bank loan?” This is always my first question to a borrower who comes to us for a bridge loan. On one particular day, the borrower I was talking to on the other line, he had good credit and an income producing property. So what’s the problem? Why can’t he qualify for a bank loan? This type of borrower, who for some reason cannot qualify for a bank loan, is the perfect target for a loan fee scam. But why?

The loan offered by the scammer seemed to be exactly what the borrower was seeking. This upfront fee scam is usually overseas, and the supposed lender says all the right things. The terms are presented in writing and “wah la!”, as they say, there’s the big upfront fee for $10,000 or more. This is the common upfront fee scam. And the borrower I was talking to on that particular day had been taken by one in Switzerland. The borrower paid the upfront fee of $10,000 and the upfront fee collector promised to fund the loan by the 31st of December. The guy in Switzerland? Well, I’m sure you can imagine what happened to him. He just vanished like the Malaysian airliner in March of 2014.

When searching for a hard money loan or bridge loan, make sure you know who you’re dealing with. There are plenty of these upfront fee collectors on U.S. soil too, so do your due diligence on a lender like you would a real estate purchase. Refer to our ‘Hard Money 101’ blog for tips on spotting upfront fee scams and how to avoid them. Don’t be “that guy,” or “gal” who gets taken by an upfront fee scam when searching for financing.

Posted by Corey Curwick Dutton