Hard money fees please help

22 Replies

I got a hard money loan from a well known lender in my area.

He says i need 12000 down i said ok. 3 days before closing he adds another 7500 for his fees. The lady who works for him could not believe it. I got the loan remodeled the house and called him to email me a pay off. Now theres another 7500 fee saying deferred interest and i paid it in the beginning. And now another fee for 12,250.00 says total attorney fees collectible under note 24500 and oh they only want half. Im really pissed off i remodeled the house and now they are trying to take all my equity in fees please help. This is what attorney senrlt me word for word "If you read the terms of the note, you will see that it allows for the statutory 15% fee when the loan is referred to an attorney for collection. That is not what our firm charges – that is what the lender is allowed to collect under the terms of the note. The fee does not have anything to do with the closing. It is not practical for a closing attorney to cover every single term of a loan at closing; furthermore, our job is to represent the lender." Are attorneys allowed to do this?

Lots going on here. I'm definitely going to be following this one. Wish you luck!

Some things I think are probably going to be asked

- Is there a way you can share the full agreement and payoff statement?

- Were you making monthly interest payments?

- What did he say the $7500 up front was for? 

- Have you asked him to clarify the charges? Perhaps he made a mistake.

@Anthony Lewis if what you are posting is correct and accurate then I would first of all never use this lender again. I would also get an attorney and see if there is a way to sue him for possible usury which is lending money at exorbitant rates. I would also threaten to report him to any and all local real estate groups and pass around his name as being a complete rip off. We buy and sell 40 plus homes a year in my market in Pittsburgh so this kind of thing happens all over the country and I see this from time to time and it is really a shame and in my humble opinion not a very good way to do business. I wish you the best and let us know what happens. 

I should get into the HML business. What a crock.

Sorry you are facing this. How much of a loan did you actually receive after putting $20k into this, plus rehab?

I'm a little confused.... The $12k I understand, were the $7500 the other closing fees? If so, that's a little high but is possible. The $7500 in deferred interest is common if it was rolled into the loan. Were you paying monthly interest payments while renovating? What is the rate and term of the loan? Now, the attorney fees are abnormal. Why is an attorney collecting the debt? Have you gone into default? It doesn't make sense that you request a payoff and they are paying an attorney to collect.

Im not in default been paying 1900 a month for the last 4 months. There was no deferred interest.

it says 7500 is deferred intetest. And 24500 is attorney fews but they only want half. Its a horrible joke i will burn the house down before i pay them 10 cents more than what i agreed to. They are greedy dont lift a finger thieves. Sad part a big lender here.

Have you talked to the actual lender? They either have something in the paperwork to support this, or they don’t. 

If they don’t, it will be really obvious to both of you in your phone call. 

All I can suggest @Anthony Lewis is to look through your lending documents with a fine tooth comb and maybe the answers you are looking for are in there. Seems like a lot of unusual fees for hard money.

my original loan amount was 105k with 48k rehab. And was originally only to be 15percent down and 3 points. I spent an extra 30k out my pocket on rehab on upgrades they refused to cover like an etra bedroom and bath to make house more sellable. I guess since he has seen my houses and my wirk he thinks he can rape me. I have had 8 other hard money loans wich i have enjoyed. This one is the worst and after wednesday if they dont fix it im going to blast them. I do believe in doing the right thing first and hope its only a mistake.

The 24500 attorney fee in there me and 3 others was unaware of it and went through the closing but it will be a cold day in hell if they think they will collect it if they dont resend it by Wednesday i will post all copies if the nites on here with the company name im sure others will not want in this situation.

I think there are a lot of people here willing to help if you can facilitate that by posting the documents for people to review and marking out any identifying info for you or the lender.  

You really only have two ways to solve this. Either convince the lender they are wrong or have an attorney do so.

This is what the attorney said to me today. Im copying it.

Mr. Lewis,

If you read the terms of the note, you will see that it allows for the statutory 15% fee when the loan is referred to an attorney for collection. That is not what our firm charges – that is what the lender is allowed to collect under the terms of the note. The fee does not have anything to do with the closing. It is not practical for a closing attorney to cover every single term of a loan at closing; furthermore, our job is to represent the lender."

Im not in collections! Ive paid every month!

@Anthony Lewis there isn't anyone that can help you without all of the information. If you want to upload the HUD and the loan documents, maybe someone will take the time to look them over, but it sounds like, if you want to stay out of default, you need to pay or hire a lawyer.
Originally posted by @Anthony Lewis :

I got a hard money loan from a well known lender in my area.

He says i need 12000 down i said ok. 3 days before closing he adds another 7500 for his fees. The lady who works for him could not believe it. I got the loan remodeled the house and called him to email me a pay off. Now theres another 7500 fee saying deferred interest and i paid it in the beginning. And now another fee for 12,250.00 says total attorney fees collectible under note 24500 and oh they only want half. Im really pissed off i remodeled the house and now they are trying to take all my equity in fees please help. This is what attorney senrlt me word for word "If you read the terms of the note, you will see that it allows for the statutory 15% fee when the loan is referred to an attorney for collection. That is not what our firm charges – that is what the lender is allowed to collect under the terms of the note. The fee does not have anything to do with the closing. It is not practical for a closing attorney to cover every single term of a loan at closing; furthermore, our job is to represent the lender." Are attorneys allowed to do this?

 The first couple sentences of your post lead me to believe you need to do a better job of getting terms in writing making sure those terms are met. There shouldn't be a $7,500 surprise just before closing. If there is, the lender better have a darn good reason for it or you fire them.

I hope this is just a mistake on the lender's part and they inadvertently proceeded as though you are in default. If not, and they are trying to get you on a technicality, be prepared to hire an attorney and fight it (and share the gory details here!). As others have said, if you post the actual terms we can provide better feedback.

Best of luck with this situation. I hope things work out in your favor!

I don't know the lender, but all of this stuff should have been disclosed in an estimate at the time it was quoted.  Is it a lender or a broker?

Just out of curiosity, were your monthly payments made directly to the lender?  Or was the attorney acting as the servicer and you were paying the attorney? 

money went from my account to lenders accoinct on ach

I'd get off this site and spend the coin to meet with your OWN attorney ASAP. Obviously, find another lender for your next project. 

Did the loan have a balloon or an end date ? If the loan expired then you would be in default and sent to an attorney

What was the original UPB:
What was the original rate:
Length of term:
Monthly payment:
Points paid upfront:

Also get an attorney to send a letter to the attorney requesting a copy of the default letter, did they ever send a default letter to you?

Originally posted by @Anthony Lewis :

152,160

Which is purchase price and rehab

Where in writing did you agree to the $24k fees?

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