Keep an eye out for lending scammers!

I remember being a new real estate investor searching for the resources that could help me find money for my real estate deals. I answered a post on Linked In and had a nice conversation with a real broker. I will start out saying that I wasn’t scammed, but it lead to my name being used to scam two elderly gentlemen out of $60,000 

Not only was I shocked, but I could have been scammed myself, but I think the lender had no idea of what that woman was doing. Had he been a scammer, he wouldn’t have taken me out to lunch and he would have asked for a fee of some kind to connect me with the actual lender. Instead he was an honest broker ready to charge me 10 points and 18% interest to borrow money. Naturally I turned down those rates. Now I always get the rates up front – learning lesson there for me.

Now that I’m more seasoned, more jaded, and more skeptical, I can spot the potential scammers from a mile away.

How to Spot the Scammer

Ultimately the scammer will ask you for a fee to get you somehow connected to you getting the loan. They may refer to it as any one of these terms:

• Loan Insurance
• Security Deposit
• Application Fee
• Registration Fee
• Non Collateral Document Fee
• Processing Fee
• Insurance Money
• Brokering Fee
• and more…

Where those fees may be legally acceptable, most often you will pay the person and NEVER SEE YOUR MONEY AGAIN. The difference between a professional lender and a scammer is they will take their fee once the deal is closed and they will be paid from the Escrow Company.

I spend a lot of time on Facebook and there is a lot of great learning information in that group. At this point though, I can spot a scammer a mile away.

Let’s look at some of the examples:

FACEBOOK POTENTIAL SCAMMER

1. GMAIL Account. Most legitimate lenders can afford to have their own domain name and direct their professional/business email inquiries to that specified email address – NOT a general gmail, yahoo, outlook, otherwise catch-
   all email account.
2. Low Interest Rate – The reality is in today’s market, nobody is lending at 5% for private unsecured loans, and no sophisticated investors will accept anything lower without collateral.
3. Area Code/Location specific issues: In this example, the area code is for San Antonio Texas location, yet he claims to be posting from Oklahoma City, Oklahoma. That alone isn’t enough to cause concern, but combined with the other information, I’m leery.
4. Misuse of the English Language: “Lending is maximize up to ….”. That could be merely a typo, but even if it is a typo the property way to express that there is a maximum limit is not “lending is maximized…”, but more “… lend up to …”, or state a minimum and maximum.
5. Bank Transfer???: This is a soft setup for you to expect to give them sensitive account information. In addition, we in the industry call it a wire transfer, not a bank transfer.

So you can see that this post is LOADED with red flags that a scam is most likely behind this post.

Let’s look at another:

1. Over Excited: He’s so excited about his loan offer, it’s obvious that he’s trying to reach the desperate. People that are in business don’t get that excited. Real lenders are looking for real savvy investors.
2. Guaranteed Approval: Really? Are you kidding me? I saw another post where they said you didn’t even have to provide your social security number or get a credit check. Really? Oh, and 100% Loan to Value? Let’s think about this – Someone is going to loan you 100% of the value of the property, GUARANTEED, (yes, I see the asterisks which may mean a disclaimer, but I didn’t see any disclaimer), and they don’t care if you pay your rent or if they will get their money back or what your credit is or if you can properly handle the asset.
3. GMAIL – again, most true business professionals use their own domain name, not some tool that can easily be a fly-by-night method for communication.
4. Misuse of English: “should please contact on.” The correct term is “…please contact at:” The reason you want to be very sensitive to these kinds of mistakes are because there are a lot of countries that do not have extradition agreements with the United States, Nigeria being one of them. They can steal from us all day long and there is no way to make them accountable for their criminal actions.

The bottom line is: The best way to stay safe is to never pay an up front fee to be connected to a lender.