So without going into extreme details. I had a property that I financed with a very shady hard money lender. Long story short lender stopped releasing draws and properties construction stopped as a result of it. I’m now looking to refinance and finish the project or look into getting bridge funding and finish the property on my own (property is about 75% done. Which would you recommend and has anyone else had a similar situation with a shady lender? thanks
That situation sounds highly unfortunate and unusual. Were you able to get an answer from the hard money lender on why they stopped releasing draws?
In any event, there are a number of reputable hard money lenders that can be found through the 'Network' tab on the BiggerPockets website. That may be a good place to start your search.
@Torean Gardner Why have they stopped sending you money? Have you talked to an attorney? How much additional money do you need?
Yes have an attorney involved the resolution is now to refinance and finish out the project with a different lender. Draws went from weeks to months to not being released at all, highly unusual I know since I have had success with other deals (hard money lenders) I had except from this specific shady lender.
Hi @Torean Gardner
Go and get another lender to refinance out the current lender. Make sure that the lender you get has the terms spelled out ahead of time so that you don’t end up with the same problems you have now.
@Torean Gardner I had a close friend who this happened to last year. He was lucky enough to find another lender. Hope all goes well and great energy your way.
For the future, when selecting a HML, make sure to check the following:
(1) Is the HML a direct lender or a broker? If they are just a broker, any commitments they are making with respect to timing and funding are not fully within their control. They are not the final decision makers and therefore cannot guarantee that a loan will be funded.
(2) Can the lender provide references (preferably current ones) so that the borrower can obtain a first-hand account of the experience with that lender? Reputable lenders should never resist providing this information. The borrower should also search the public domain for any reviews of the prospective lender. If the lender holds himself out to be BBB accredited, then the borrower should also check the lender’s BBB rating.
(3) How long has the HML been in business?
(4) How long does it take to get a term sheet?
(5) What fees will be the borrower incur? The borrower must inquire as to the nature and amount of all fees he will be charged. There should be no surprises on the HUD.
(6) Is there a prepayment penalty?
(7) How quickly can the lender close?
(8) Can the borrower use any contractor?
(9) Does a third party perform draw inspections? If a third party is responsible for draw inspections, the likelihood increases of it taking longer from the time the draw is requested to the time the draw is funded.
(10) How long does it take to receive funds from a draw?