When do you pay Origination Fees for MFRs?

Question

I'm working with a lender who is asking for origination fees up front a few weeks before closing.  I've always paid origination fees as part of the loan on signing day for my SFRs.  Is it any different with Commercial MFRs?

I'm just cautious of scams and similar.  I did some homework on the lender and they have a LinkedIn profile, website, etc but no reviews.

Nicholas Covington · Answer

Any lender asking for compensation up front before the loan is closed is a red flag...

Upfront fees should only be 3rd party related to outside of the loan itself ie: appraisal, inspections, etc...

Right now times are a little tough, so one could only expect more "scams" to come about.

Alex Bekeza · Answer

@Miles Tiglao Who is the lender?  This would be hard no from me if was you.  This is not standard practice.  Origination is always paid at closing.

Erik Estrada · Answer

Did you look up the lender's license number in the NMLS?

Beth Johnson · Answer

Good thing you did a lot of due diligence to determine if/how to proceed! No legitimate lender - bridge financing or permanent - will ask for an origination fee before they even originate the loan. As a private money lender myself, we NEVER accept or require money before the loan closes, and we have all funds transferred between the escrow closing agent and borrower. As a real estate investor who does commercial multi-family, no financial institution I've used for commercial loans has required points upfront but some have required us to send a deposit in advance - typically a small amount like $3000-5000. All monies have been held with escrow or at the bank itself.

Miles Tiglao · Answer

A friend and I did a lot of digging and it turns out that the guy was a scammer -- a pretty elaborate one.  I don't want to reveal info yet because I'm trying to pull some information for the authorities.  I'll post more info on this thread later.

Unfortunately, this also means that my deal is in risk as I need to start looking for other lenders.

Thanks to everyone on this thread for helping my validate my suspicions!

Nicholas Covington · Answer

If commercial, good chance they don't have one. Probably would be nice if there was more regulation around this such as there is a CRE Agent.

When do you pay Origination Fees for MFRs?

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