Lender Scams and Warning Signs: Beware & Protect Yourself!

100 Replies

Originally posted by @Bryan Hancock :

I have been chasing money for many years now and it is almost universal that people who ask for money:

1. Up front
2. Outside of escrow

that does not involve paying for appraisals or other reasonable costs are scams. Legitimate funding sources can generally provide references too and can rattle off deals they have recently done.

If people pass those hurdles the is a high probability they are legit.

Thanks, good to know!

Originally posted by @Anthony Woods :

Jnb finance llc, any information 

 I was contacted by that guy at jnb ,and after all my paperwork done by email. He started texting me every conversation. Got weird after he wanted 2k,said i'd think about it. He got aggitated and finaly said'I BETTER think about it'.very threatening. A psych jobfor sure! Not sure this is too late for you.

Think about the information you are sending!  In the lending industry we get everything necessary to be able to use your identity and do anything with it!  This isn't a problem with a honest lender/broker but it sure is if you hand over your information or your client's information to someone that isn't truly who they say they are!  Recently I asked about a loan program that a "direct lender" had and when the response that came back was quite a bit out of the ordinary I decided to do a little research.  When the phone number didn't work and the website didn't work I knew not to move forward.  Imagine how many times someone sends information without asking questions?  Social Security Numbers, Employment, Date of Birth, Bank Account info, you name it....  take a few extra steps before you send anything that you wouldn't want a scam artist to have!

The short of it is this. If someone asks you for a LARGE deposit up-front then it is a scam. I offer private financing to lots of different clients and I work with many different investors. Some do not care at all and some do charge a minor fee up front. When I say minor I am talking about a $300 fee to pay for an appraisal or BPO. 

There is always a cost of doing business in this world so you must understand that appraisals and BPOs may be needed to asses a property, and if you are the investor expecting to make $30,000+ then the $300 fee is a standard and usual cost. 

If someone asks for a crazy amount, say like $1500 on a standard SFR deal then that is wrong and sounds fishy. If someone asks for $1500 on a commercial deal, well, that is pretty standard and usual.

Use common sense and revert to this thread and other threads for advice. That is my take on it.

If it sounds too good  to be true....Than it is. Last I checked bigger pockets has a page with recommended lenders no?

Hi @Trevon Peracca - Did you ever figure out your dilemma regarding whether to go into the joint venture deal or to purchase your primary residence?

If not, my vote is for you to focus on securing your primary residents FIRST.  However, you should do this by purchasing a multiplex in which you will live in one unit as your primary residence (house hacking) and rent out the others. A multiplex will allow you to better qualify for legitimate (less complicated) loans for higher amounts taking into consideration the income from the rentals. It will also help build your credit and allow you to hold while you build equity that you can use to engage in a joint venture at a later time.

I also suggest you research 203k loans, which allow you to borrow an amount over the property purchase price to include repair cost. The loan will be based on the after repair value (ARV). This way you can buy the multiplex at a lower cost, and rehab it with necessary repairs and upgrades, which adds value and further increases your equity.

There is plenty of information in the BP education area about 203k loans and multiplex purchasing that can guide you in making your decision.  I hope all is well with you and I hope to get an update on your progress.

Originally posted by @Charlotte Moore :

Hi @Trevon Peracca - Did you ever figure out your dilemma regarding whether to go into the joint venture deal or to purchase your primary residence?

If not, my vote is for you to focus on securing your primary residents FIRST.  However, you should do this by purchasing a multiplex in which you will live in one unit as your primary residence (house hacking) and rent out the others. A multiplex will allow you to better qualify for legitimate (less complicated) loans for higher amounts taking into consideration the income from the rentals. It will also help build your credit and allow you to hold while you build equity that you can use to engage in a joint venture at a later time.

I also suggest you research 203k loans, which allow you to borrow an amount over the property purchase price to include repair cost. The loan will be based on the after repair value (ARV). This way you can buy the multiplex at a lower cost, and rehab it with necessary repairs and upgrades, which adds value and further increases your equity.

There is plenty of information in the BP education area about 203k loans and multiplex purchasing that can guide you in making your decision.  I hope all is well with you and I hope to get an update on your progress.

 Yes I actually closed on my primary residence back in DEC 2015. I wasn't a fan of the way that other gentlemen did business. 

@Trevon Peracca Do you remember the company that tried to get you the different lines? I recently opened up lines of credit with 5 different banks with Midwest Corporate Credit out of Oak Brook. It was a referral from a BP member here. 

They charged me 8% fee instead of 10%, since I was a referral. You're right in regards to the hit to your personal credit score. My credit was over 800 when I went forward with them, and now it is under 800. But they did get me lines of about $65K. 

Now, do I think it is based on their relationships with the banks? maybe. I know at least 1 of is. But they certainly know the process very well, and were very helpful along the process.

The biggest issue for me is since these are credit cards, you can't really write checks from them. I called all 5 banks looking for "transfer balance" checks and only 1 of them will send me those checks. The other one has to do it online. So I have to think of creative ways to "unlock" these lines of credit. I was planning to use these to pay off my HELOC so I can acquire another property. But I am still spinning my wheels.

Perhaps when I establish my history with these banks, I will get higher lines in the future. But I have to say these lines have not been very helpful in my business so far. And I had to pay over $5000 for their services. which incidentally I can charge on 1 of these cards as well. 

For a flipper, these lines will definitely make sense when you deal with businesses that can accept credit cards. 

hey guys thanks in waves . all day i been tracking down a (no money lender) . this guy contacted me on BP with a 5% hard money loan for upto 20 years. told me he was on all the business sites. i checked and to my surprise his name was there. but in three different places his picture was different. when i texted 2 of them and told them to send the info to my lawyer. one told me he doesn't do deal with a third party...uh my lawyer works for my company. smh (randy phillip hinkle) check this name out and see what i see. i love BP cause of you guys. the best way to meet lenders is from investor in your areas. i have went out and met some good guys that are helping me do my first deal.

One guy introduced me to MCC as well i did the credit card line of credit and had to pay 10% hindsight i feel i could have done the search. i put the card in my business name i took the hit on my credit. i have a partner that is going to use her credit to do the closing,. so we have extra cash to do the rehab

@Epi Villarreal ,

Would you mind posting that link again?  I was unable to get to that forum thread.

@Anthony Woods ,

I was also contacted by John Batros from JNB Finance.  When I called him to talk about a loan he referred me to Lazard Kisel with Joinville Finance.  Lazard was willing to pretty much lend me as much money as I wanted, but I needed to wire the deposit to him.  As I have realized, it looks like I was referred by one scammer to another!

Also, thanks for the info @Jeanne Victor!

Has anyone ever been contacted by someone by the name of Jim Hunter? Or have worked with someone named Jim Hunter?

Checking to see his legitimacy.

@Steve Snyder   boy you seem to be running into a bunch of questionable folks were are you finding them .. getting sucked into the too good to be true rate and term guys ?

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I was contacted by Kevin Harrison on BP, who said he is a "financial agent" who works with several private lenders. He referred me to a private lender in Texas named Lazard Kisel with Joinville Finance, Inc. He offered a loan of 7.5% with 3 points, which is very reasonable. Then he sent me a contract that said I would need to send a wire to his title company, JM Investor Title Agency in NY, for the 3 points, that they require the 3 points prior to closing. In this case that was $5700.

I marked up his agreement and indicated I would send the funds to my title company who would verify the legitimacy of his title company and the existence of the closing funds then wire the points to him at closing. He sent an angry-toned email back saying I shouldn't have "canceled the agreement by writing on it" and that I should look for another lender. Look out for this guy! 

@Scott McMahan I got contacted by the same person not too long ago. I called Lazard and during our conversation, there were so many red flags that I could not go through with it. I googled the name of the company and couldn't find much information about it.

@Connor Maloney , @Scott McMahan , I wish I'd thought to check this thread before I did something stupid. I, too, was scammed by Kevin Harrison and Lazard Kisel. I fell for the "appraisal fee" and "due diligence" fee, but my Spidey sense went to 11 when he said if I used his personal title company business then I would "guarantee 100% appraisal funding" or something similar. I immediately replied that there was no way in hell that was going to happen, and he's since gone dark, both via text and email.

I'm going to go after him in small claims court to see if I can get my fees back, but I'm not hopeful. What's weird is that I had a family friend who is an officer of the court do a background check on the guy (Kisel) and nothing funky came up. The only odd thing she noted was that she couldn't find a driver's license number for him.

@Andrew Taylor ,

I am very sorry to hear that you got scammed by Lazard. I did a lot of research on him, but the only thing I could determine was that he might be hiding behind a legitimate LLC of Joinville Finance to make people think he is the real deal. I called the state of Texas to verify that Joinville Finance, LLC was real and they confirmed it. The officer for the LLC is something like Paula Kisel. It might be worth contacting the TX and reporting the LLC. Also, I contacted a Sarah Kisel One time that I talked to him, he said he had a farm in Shiner, TX. It was probably BS, but just trying to give you more information. Good luck finding the guy!

I just did some quick research and here is his website:  http://joinvillefinances.com/.  It was under construction when I was talking with him.

I'll keep trying to mess with this guy.  That is really messed up that he think he can just take advantage of people.

-Connor

The Best way to know whether a Lender will Perform is asking their Past Clients.

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Hello Bigger Pockets friends!! I just received a friend request over Facebook from Harry James who portrays himself as a private lender. THIS IS A SCAM!! He sent an email with all the conditions which I will share with you. There is no such company in NY. The address he gives is a Wall Street address that I could not cross reference. I would stay away. I also found other posts throughout the internet that shared the same info just with different letters and addresses given to them. Click on Financing Scam in order to view the letter.

Financing Scam

Anyone have experience using LendingClub?  It's an Experian company.

I created propertygo.com to get rid of a lot of scams. We are a common application to apply to a select network of the leading hard money, bridge, and bank lenders. All of our lenders are established in the industry. 

PropertyGo is free to use for borrowers. Lenders pay us to be apart of the network. We have lenders like Bank of America and CitiBank, all the way to hedge funds and private equity debt funds like Thorofare Capital. Applying on PropertyGo creates a direct application to these firms.

Check it out, avoid the lender scams!

I think up front fees of any kind is outside of the norm.  Legitimate lenders deduct fees from the amount of money granted ...Your thought?

Thanks..

I am a newbie learning the ropes..

I am a newbie, so I definitely appreciate all of the great information given on this thread.  I would just like to warn everyone about using Priority One Title Company and Spirit of Texas Bank (which use to be Texas Community Bank).  About 5 or 6 years ago, I was introduced to a "business partner" and decided to put a mortgage on my house to help supplement his funds. Although my house was worth double the amount of the loan, I didn't realize that the president signed as the Trustee and the agent. To make a long story short, no matter what we did the bank did not adhere to releasing the draws in a timely fashion and ended up foreclosing on my house. There was about $11,000 missing as of the closing date that the bank and title company claimed the other had.  I did file a law suit, but had to fight pro se due to the fact that I couldn't find a lawyer who was willing to go against the 2 entities. The lawyers that I did find said they take the case in exchange for my house and give me $75,000.  The last judge we appeared in front of told the bank that she couldn't legally allow me to accept their offer, even if I wanted to (which I didn't)...her court had no authority to judge the fraud, and by then I was too exhausted to refile the lawsuit.  I hope I don't ever meet snakes with venom like that again, and I hope no one has to experience what I have in the past. I'm not sure to this day if the business partner was part of the scam or a victim, which is why I did not type his name or the name of his company...I will never do business with him again though.

Updated over 2 years ago

I feel the need to say that the bank did relieve the President, at the time of incident, of his duties before changing the name of the bank and before going to court.

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