Am I Being Scammed? Origination Fee

Private Lending & Conventional Mortgage Advice

Am I Being Scammed? Origination Fee

Investor · King of Prussia, PA · Member since 2014 · 1k+ posts · 339 votes

I’m looking for a loan to purchase an 5 Unit apartment and came across a lender. He told me I have to pay a $3,600 origination fee for for $180K.

I told the lender from Metro Financial Services, INC that I didn’t want to pay the fee if it’s not guaranteed that I’ll get the loan to which he assured me that I will definitely be approved for the loan & there will be a contract letter stating I’m going to get the loan funds. If something happens my money will be refunded back to me.

What are your thoughts? Is this a scam? The lender’s name is Gerald Kelly. Thanks in advance!

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Jon Holdman

Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes

Originally posted by @Ayodeji Kuponiyi:

@Account Closed This is the terms & conditions:

TERMS AND CONDITIONS

1. The Loan attracts an interest rate of (4%) per Annum, and the loan repayment starts 2 months after loan has been transferred to Borrower.

7. Applicant is to pay a onetime fee which will cover the processing of all documents and transfer of funds to his/her account and this usually depends on the amount of you are looking for.

8. No loan can be approved for a borrower with credit scores below 400.

There are many red flags in these "terms". Here are just a few.

"The Loan attracts an interest rate of (4%)". That would be a great rate. Red flag #1. The phrase "attracts an interest rate" is language no legitimate lender would every use. Red flag #2. Implying they could fund a loan at a 400 credit score. Bull... hockey. That's so far into dead beat territory nobody would fund that loan. Red flag #3. Up front fee. Red flag #4. Not just a red flag, a big burning bon fire with fireworks coming out in every direction. This "lender" is a scammer. Period. Move on.

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Account Closed
Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes
8y
Origination fees generally come out of the funding money, that is, lender would fund $176,400 (180k-3.6k), not the full $180k. The note and mortgage would show a loan of $180k. Are you sure there isn't a misunderstanding?
1 Reply
Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
8y
You won't know for sure until your $3,600 disappears but this sounds like the typically hard money scam.
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5 Reply
Ayodeji Kuponiyi
OP
Investor · King of Prussia, PA · Member since 2014 · 1k+ posts · 339 votes
8y
@Account Closed This is the terms & conditions:
TERMS AND CONDITIONS
1. The Loan attracts an interest rate of (4%) per Annum, and the loan repayment starts 2 months after loan has been transferred to Borrower.
2. Failure to pay back the loan at this expected date/period, legal actions will b e taken against the applicant by my attorney immediately.
3. Applicant who is unable to meet with the repayment will be given 2 weeks more as a grace period before legal actions will be taken.
4. I can also adjust the duration or the term of the loan if the applicant can’t repay or need the loan for a longer period of time.
5. In agreement to this, applicant will be expected to send a signed copy of the loan terms and send to me for further documentation. Once this is received, I will inform you when your loan will be approved and ready for transfer.
6. Applicant must provide the following:- A Driver’s License, Or An International passport, Or a valid Identity Card bearing his/her name.
7. Applicant is to pay a onetime fee which will cover the processing of all documents and transfer of funds to his/her account and this usually depends on the amount of you are looking for.
8. No loan can be approved for a borrower with credit scores below 400.
If you are in terms with me t hen we can start with the processing of the loan funds.
0 Reply
Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
8y
@Ayodeji Kuponiyi You'd be insane to proceed with this "lender".
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6 Reply
Ayodeji Kuponiyi
OP
Investor · King of Prussia, PA · Member since 2014 · 1k+ posts · 339 votes
8y
@Tom Gimer please explain why
0 Reply
Account Closed
Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes
8y
Apart from the wacko terms, the language is obviously a scam. Is this the kind of thing BP attracts? Where did you find this lender? I guess I'm out of touch.
1 Reply
Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
8y
@Ayodeji Kuponiyi For starters, the interest rate. But read those terms carefully and you'll see that you aren't dealing with a lender at all... you're dealing with a moron.
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5 Reply
Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
8y
Originally posted by @Ayodeji Kuponiyi:

@Account Closed This is the terms & conditions:
TERMS AND CONDITIONS
1. The Loan attracts an interest rate of (4%) per Annum, and the loan repayment starts 2 months after loan has been transferred to Borrower.

7. Applicant is to pay a onetime fee which will cover the processing of all documents and transfer of funds to his/her account and this usually depends on the amount of you are looking for.
8. No loan can be approved for a borrower with credit scores below 400.
There are many red flags in these "terms". Here are just a few.
"The Loan attracts an interest rate of (4%)". That would be a great rate. Red flag #1. The phrase "attracts an interest rate" is language no legitimate lender would every use. Red flag #2. Implying they could fund a loan at a 400 credit score. Bull... hockey. That's so far into dead beat territory nobody would fund that loan. Red flag #3. Up front fee. Red flag #4. Not just a red flag, a big burning bon fire with fireworks coming out in every direction. This "lender" is a scammer. Period. Move on.
14 Reply
Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
8y
What Jon said ......times 2
0 Reply
Alex Correa
Lender · Miami, FL · Member since 2016 · 47 posts · 17 votes
8y
Ayodeji Kuponiyi Scam all the way.
0 Reply
David Zheng
Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
8y
I started laughing when I read the terms. and no offense, but with over 1000 posts, you should've been able to spot the HUGE red flags from the get go.

no loan term, a static rate, "my attorney", upfront free instead of having everything figured out at closing.
1 Reply
Ayodeji Kuponiyi
OP
Investor · King of Prussia, PA · Member since 2014 · 1k+ posts · 339 votes
8y
Thank you all. I suspected as much and wanted to be sure. @Tom Gimer @Account Closed
0 Reply
Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
8y
what happens when you google the phone number and email address
0 Reply
Kevin Lanting
Specialist · Lake Stevens, WA · Member since 2017 · 7 posts · 0 votes
8y
Lots of scammers out there, they feast on newbies never give deposit....comical to hear them bag for it. I don't got money but man to beg like that...then I call them out, that's even better. Dial tone. I was just offered another right now...same deal Braun Aaron Hugh is the name on this one. Trust in this industry is not what it should be...in the end no one wins. Society lets money be the root of all evil. Choice...it makes life simpiler but doesn't Buy happiness. Its either cheap or expensive that's the choice it gives you, it doesn't come with choice of quality.
0 Reply
Ayodeji Kuponiyi
OP
Investor · King of Prussia, PA · Member since 2014 · 1k+ posts · 339 votes
8y
@Matt K. when I Google the company, I couldn't find it but saw him on LinkedIn but it could be a fake page to appear real. @Kevin Lanting very true!
0 Reply
Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
8y
Google the phone number
0 Reply
Houston Pitts
Investor · McKinney, TX · Member since 2017 · 28 posts · 5 votes
8y
I see this seems to be a recurring subject and yet, I don't see where BP has anyone they can recommend. I see lots of advice to "research, google, and go see their facility".
What I don't see is where there are BP staff that have recommendations. Newbies need a proven Step By Step procedure for finding funds.
I guess they are afraid of recommending. I get that.
I hope you find one!
0 Reply
Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
8y
Originally posted by @Houston Pitts:

I see this seems to be a recurring subject and yet, I don't see where BP has anyone they can recommend. I see lots of advice to "research, google, and go see their facility".
What I don't see is where there are BP staff that have recommendations. Newbies need a proven Step By Step procedure for finding funds.
I guess they are afraid of recommending. I get that.
I hope you find one!
If you want legit hard money, there are advertisements off to the right as well as many HML on BP. You can also find them at your local REIA meetup, your local BP-organized event, or something you find on meetup.com.
If you want Fannie money, there are many lenders on BP with their license # right in their signature block, that you can look up. You can also find them at your local REIA meetup, your local BP-organized event, or something you find on meetup.com.
If you want hard money with Fannie-like terms, from someone that hasn't done a dozen deals with you before at normal HML rates/terms, it does not exist and you are wasting your time. Why would anyone lend you money at 4% when they can dump it in a Wall Street index fund and get 6% with less risk?
4 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
SCAM! I just went looking for private or hard money. Almost all the responses were scammers. I got offer 3% LOL! I had a few replies with almost this identical language.
If you plan to deal with a hard money lender, you should require any fees are paid out of closing. NO exceptions.
2 Reply
Jeff Filali
Rental Property Investor · Broken Arrow, OK · Member since 2016 · 1k+ posts · 1k+ votes
8y
@Ayodeji Kuponiyi That's a definite scam, there's many of those out there. They're all over social media sites with ads.
If you click on "NETWORK" at the top of BP pages, then click on "HARD MONEY LENDERS" you can search for HMLs by state.
0 Reply
Houston Pitts
Investor · McKinney, TX · Member since 2017 · 28 posts · 5 votes
8y
Chris Mason, thank you again for your help. I will look into those on BP. I have been stuck in the search mode for a couple of months now trying to find legitimate lenders. Had one deal pass due to time running out on contract. I am not giving up though. Its all just formulas and you have to fill in the blanks, the rest will work itself out. Thanks again Chris!
0 Reply
Clint E.
Investor · Saint Charles, MO · Member since 2016 · 118 posts · 91 votes
8y
Don't forget to report all of this person's information to your attorney general and / or consumer financial protection bureaus.
2 Reply
Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
8y
If scammy people are contacting you through this site, please let me know.
[email protected]Podcast Guest on Show #261
4 Reply
Wil Reichard
Rental Property Investor · Greenville, SC · Member since 2017 · 185 posts · 178 votes
8y
Originally posted by @Jon Holdman:

Originally posted by @Ayodeji Kuponiyi:
@Account Closed This is the terms & conditions:
TERMS AND CONDITIONS
1. The Loan attracts an interest rate of (4%) per Annum, and the loan repayment starts 2 months after loan has been transferred to Borrower.
7. Applicant is to pay a onetime fee which will cover the processing of all documents and transfer of funds to his/her account and this usually depends on the amount of you are looking for.
8. No loan can be approved for a borrower with credit scores below 400.
There are many red flags in these "terms". Here are just a few.
"The Loan attracts an interest rate of (4%)". That would be a great rate. Red flag #1. The phrase "attracts an interest rate" is language no legitimate lender would every use. Red flag #2. Implying they could fund a loan at a 400 credit score. Bull... hockey. That's so far into dead beat territory nobody would fund that loan. Red flag #3. Up front fee. Red flag #4. Not just a red flag, a big burning bon fire with fireworks coming out in every direction. This "lender" is a scammer. Period. Move on.
Right on the money. Coudlnt have said it better
0 Reply
Frank Y.
Lender · Philadelphia, PA · Member since 2017 · 225 posts · 72 votes
8y
By looking at the terms, do you really think that is NOT a scam??? Run away as fast as you can!
0 Reply

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