Hard money Lender Fails to fund Draw # 2

[Dziko Thunde]

What do you do when lender fails to fund your draw after they have already approved it.

My deal is funded by Terxxx and they have been moving goal post of when they can fund the draw after they approve it. Their website said they can fund the deal in two days after approval. First draw, they couldn't fund it in two days and I asked them why if they said on their website that they can fund it in two days. They said that they have a problem with their funding department, so they now fund it in 10 days. They went and changed their website to 10 days funding of a draw after they have approved it, instead of improving their systems to be able to fund approved draws in 2 days. That first draw caused me to receive my money late and got my account overdrawn that month.

On this second draw, I made an allowance of 10 days and got my draw approved 10 days before the end of July. The funding deadline fell on a Sunday and they said they will release the wire on Monday. Monday comes and they don't release the wire. I follow up and they they say they have problems with their funding department. No specific explanation. I ask for specific explanation, no clear answer, just, "top management knows we have this problems and we will update you about what they say."

"WHAT? You will update me of what top management says about my approved draw, after 10 days have elapsed?"

"The job has already been done, I have used up all my money to complete the tasks, I have submitted all the photos and related task on scope of work/budget and you have approved and I have waited for your 10 days to get funding and now I have to wait for top management to resolve an internal issue, I don't know about; and you don't specify how long it will take to resolve...what's going on?"

They don't clarify and emails come in just vague. I got fed up and told them that they shouldn't write me, they should just fund my deal.

Imagine if I had made arrangements with contractors that they will be paid on the day the lender had promised to fund the draw and wire the money and the money wasn't there.

Imagine what the contractors could do as I shift and vacillate on when they will be paid according to the lender's vague emails

Imagine people that have worked and are waiting for their butter and bread, rent and livelihood to come out your pocket for the good job they have done being told vague sentences every time they inquire about their money

Imagine the anger that will build up

Imagine angry contractors coming to smash and destroy the work they did in anger that they won't get paid.

Do lenders consider these things or they just think borrowers are pawns in their hands that have to give them origination fees? $995 here and a $1,995 there before closing. Interest due on first day of the money. When borrower has a problem, they start stacking numbers then threats, then lawyers, then foreclosure.

Is this the game or real estate that the lender is the might and borrower a slave?

Proverbs 22:17 The rich rule over the poor; and the BORROWER IS SLAVE TO THE LENDER

If the borrower is slave to the lender what's the position of the contractors in this food chain.

The modern kind of slavery in America? We are not in real estate to get rich and live the lifestyle that's in the podcasts and TVs; a lifestyle of greed and lies; manipulation and, essentially, 'witchcraft' where everybody is just a pawn in a big game to make you money "when you are asleep"...making "generational wealth" while you are at the beach (like Biden at Rehoboth Beach), enjoying yourself and people toiling for you and you can't fulfil the promises you made to them.

97% or more that are into real estate are there for a normal livelihood; day to day survival and are running this country with their taxes, yet under appreciated like the men in uniform, abused by those that think greed is how the game is played - be articulate in American English accent and flash out promises that you can't keep; create attractive websites with wonderful promises...

I used my money to take care of the contractors with hope that lender would honor the contract we signed, a contract that they would take to their lawyers to foreclose on me if I default.

'Oh! How powerful are lenders! They have millions at their disposal to sue a struggling borrower and crush them and end their business, take their house and leave them with bad credit for 7 years!'

Oh! That's immense power money can buy.

BUT, why not use the same money they would pay lawyers to improve their systems to serve borrowers and everybody down the food chain.

I used my money and now, in a new month, interest for my other properties, car payments and many more financial obligations cannot go through my bank. Payments are being turned down and each payment dishonored is attracting a bank charge....

How painful when your vulnerability is exploited by those that think they have power, those that rule by greed and manipulation!

How disheartening when a system fails you and everything crumbles before your eyes, and you look stupid before your wife and kids: Your kids ask, "why does daddy have money?", Your wife tells you to get out of 'her' house AND YET, you've worked harder than the rest of them white collar workers...

And what you have to show for that is tears, shame, a broken marriage...looking like an idiot chasing fantasies...yet, it's only because the 'mighty' threw you under the bridge where no one can survive in the current of that river......

[Jay Hinrichs]

Quote from @Dziko Thunde:

Quote from @Jay Hinrichs:

u simply went with a poor lender.. this has nothing to do with slavery.  If you miss a draw and it Over drafts your account then your not properly capitalized internally yourself. 

 Money is held in escrow at closing. A lender is not supposed to touch it and buy their girl friend sexy underwear and when the borrower comes to request same, they refuse to honor the contract. May be there is something I am missing here that the contract we sign is all phony, or just works in favor of the lender

I don't think there is anything like a poor lender once the closing is done. Unless I am missing the legal part of this that can be manipulated and the money taken out for other purposes

The majority of borrowers is this country in real estate are very small and if you think that they should be "properly capitalized', it's because you inherited your fortunes but most people that are lending for flips and making money for lenders are small and hardly have the resources to pay for tasks before draws and may be overstretched if they have more than one flip going on at one time

The reason that many contractors can't flip houses is not knowledge of flipping houses but the financial resources and the risk that a lender can do stuff like what my lender did and destroy their business and livelihood

COVID destroyed a lot of small business and that should tell you that they bulk of the people that make this country run by being over taxed are the ones that pay high interest loans, not, 'properly capitalized' and one event can have a domino effect on their whole life; FICO spiraling downwards because they missed one payment from several lenders, 

AS a HML myself at one time I had 25 employees that worked for me doing the lending side and our court house steps buying and of course our rehab crews were in house.

AS such I can tell you with non regulated HML which all of them are there is no law regarding how they hold the rehab funds.. they are not banks or federally regulated.. So rehab funds are never "held in escrow" unless your dealing with a mom and pop and they do that on purpose. 
But there reputation is on the line if they cant fund rehab draws.. so they manage there money by payoffs and new loans and draws.. and its up to the company not to run out of money that means POOR management.  

One of the bigger regional HML fund that flip I believe they ran into this problem last year I was getting e mails from borrowers looking for funding because the company ( according to them so its 2nd hand info) did not have the funds to forward the draws.. 

I get it about reserves etc but end of the day this is a high risk business all the way around. 

And actually the GFC had a much bigger effect on RE folks and flippers and builders than Covid did probably by a magnatude of 50X.