Is this Hard Money Lender a scam or not?

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Is this Hard Money Lender a scam or not?

Bryan Normal
Member since 2020 · 20 posts · 10 votes

First time vetting hard money lenders for a flip I have under contract but not closed yet. One potential lender has attractive terms (8%, 2 points, 100% financed, no prepay penalty), but on the phone he has very spotty English so it's hard to talk to him, and his contract seems suspicious in areas too. However, he does appear to be registered with the State of Ohio as a business entity, and also "Licensed by the OHIO Bureau of Real Estate (BRE) (#01925898)", which I could not find this organization via Google (I am in Michigan). In his loan terms sheet, he is asking for about $1400 Loan Origination Fee, and my bank account # and routing # to deposit into. His address for his company is just a UPS Store mailbox, and the phone number is just his cell.

Does anyone know of ways to sure-fire guarantee he's not trying to rip me off, short of just not using him? His website seems mostly legit (The Private Funding LLC) and his loan application does too. I can also offer the loan application he sent over, if that helps. Thanks for any insight anyone might offer, I'll probably run it by a lawyer tomorrow.

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Caroline Gerardo
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
4y

UPS mailbox screams RUN. Website pasted from other sources. Says he does conventional loans but he is not licensed to do this.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Quote from @Horia Jordache:

    I agree, Jay, they are legitimate, though I provided every imaginable piece of information and documentation regarding the property and waited a couple of days for them to review. LO called and said it was reviewed by UW and good to go, asked me to pay the $1500, after which I was told the next day that UW didn't like the property. That's the rub. Good to go...pay $1500...not good to go. We didn't even get to the actual application. At least they refunded the fee, though wish they were a bit more honest before charging it. 


     I will have to ask my clients if they got the same treatment..  I agree with you  should not have to pay upfront like that you should only pay at closing other than a small app fee that some charge like 100 to 150 bucks this keeps the lookie loos at bay and time wasters and then an appraisal fee of course that goes to the third party..  if it was a scam company you would never have gotten your 1500 back that's for sure.  Were you working with the Cleveland Office ??

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    1Reply
  • Horia Jordache
    Member since 2019 · 5 posts · 2 votes
    4y

    Not sure what office I worked with, just input my deal into their online system and someone called me. I'm not upset with them, just feel like they should have looked at the deal a bit better prior to asking me to pay. Their term sheet states that they withhold $500 should the loan be denied for any reason. 

    0Reply
  • Brandon Rauscher
    Investor · North West Suburbs of Chicago · Member since 2021 · 39 posts · 19 votes
    3y

    This is the guy on FB. Are we in agreement that he is fake or is he legitimate?

    https://www.facebook.com/Johnw...

    0Reply
  • Akwasi Asante
    Member since 2022 · 2 posts · 0 votes
    3y

    @Bryan Normal what did you end up doing? I saw this lender on Facebook advertising his services. Was he legit or was it a scam? 

    0Reply
  • Ivy Brummett
    Member since 2023 · 2 posts · 0 votes
    3y

    I had a similar situation with another lender. He was recommended by a broker on Facebook. I didn't know either. He wanted $5400 wired to him for PMI. His reasoning is because he had been ripped off too many times. He had a thick accent- Irish maybe? AI and voice changing tools can do miracles. He had a legit site as well. I found out from my title company, that he had done the dame to others and went MIA with the money.

    I would stick woth traditional lenders/brokers unless you really know the person. I'm actually speaking to John Wilson myself now. He seems to have the same red flags.-- contacting me constantly asking if I got the email, etc. private lenders don't push like that. Also, when asked for his nmls number, he hasn't provided one. How far have you gone with this?

    0Reply
  • Jeffrey Elias
    Member since 2023 · 11 posts · 1 vote
    3y

    Hey, just found this thread after connecting with this lender today and does seem legit. He will send money to escrow which many scammers will not, or at least he says he will. Also said we can get in a call later today to discuss. Definitely red flags tho, did anyone attempt a loan with him?

    0Reply
  • Rudy Andrade
    Member since 2023 · 1 post · 0 votes
    3y

    I hope I didn't make a mistake I just sent this guy our tax returns and signed a contract for cash to my account 

    0Reply
  • Jessica Carvajal
    Member since 2023 · 4 posts · 0 votes
    3y
    Quote from @Rudy Andrade:

    I hope I didn't make a mistake I just sent this guy our tax returns and signed a contract for cash to my account 


     Hello Rudy! can you tell me if you singed contract with this lender? I`m trying to figure out if they are real.

    Thank you

    0Reply
  • Rudy Andrade
    Member since 2023 · 1 post · 1 vote
    3y

    I did but canceled my email immediately after. I don’t trust this guy. I talked to him over the phone and everything sounded shady. 

    1Reply
  • David Tran
    Member since 2023 · 10 posts · 7 votes
    3y
    Quote from @River Sava:

    Hi Bryan- 

    Frustrating having to go through that. I can put you in touch with a reputable hard money lender. Just sent you a friend request. 


     Can I get this info as well please!

    0Reply
  • Kevin Hart
    Real Estate Agent · Louisville, KY · Member since 2014 · 257 posts · 172 votes
    3y

    @Bryan Normal I'd stick to using local Hard Money lenders. People you can meet in person or who other investors have referred to you. Building a relationship with a good local HML can help you scale your business and help you keep buying with confidence. I use the same couple Hard money lenders here in Louisville, KY and they have turned into valuable partners in my business.

    2Reply
  • Ryan Davies
    Investor · Salt Lake City, UT · Member since 2019 · 339 posts · 126 votes
    3y

    If it sounds too good to be true, it probably is. Trust your gut. I wouldn't pay anything up front and use a title company to ensure it goes through smoothly. Most are 10-14% interest and 1-5 points.

    0Reply
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