​Are You About to Be Taken By a Loan Scam?

Have you been seeking a loan, specifically a hard money loan, or some other form of alternative financing? Take a long, hard look at your potential lenders and ask yourself, “Are they legitimate lenders?” If not, the next question to ask yourself is, “Are you about to be taken by a loan scam?”

So how do you find out if a lender you are working with is legit? Here are several, big warning signs:

1.Poor English Grammar in Email or by Phone: To read the emails sent by these perpetuators of loan scams, it’s easy to see that they are lacking in basic English grammar skills. This is a sign that someone who is located overseas is pretending to be a lender on real estate in the U.S. They have no ability to make such loans, but instead try to steal your personal identifying information or will try to take an upfront fee in advance of making the loan. Try to avoid such individuals at all cost, as you will never get a loan from them.

2.Loan Approvals with No Questions Asked: If a lender offers you an instant loan approval and no questions have been asked, this is most likely a loan scam. (This is very different from a pre-approval letter from a mortgage company or bank). Most often these fake lenders are seeking an upfront fee, to sell you a fake insurance policy, or to steal your personal identifying information. When a lender has no questions about a loan request that has been rejected by other lenders and instantly provides a loan approval, make sure you run away, and run away quickly.

3.Are they Selling Fake Insurance? A growing problem in non-bank, alternative financing is the pushing of bogus insurance policies by fake lenders. These individuals or groups pose as lenders and approved the loans with a requirement of purchasing some type of life insurance, or other insurance. (Title insurance or homeowners insurance are standard policies that are paid for only when the loan closes and funds and not before). Besides these two types of insurance, anything other than pre-paid insurance may be fraudulent, so be careful when pre-paying for any kind of life insurance, prior to closing on a loan.

These are just 3 obvious signs that a potential lender you are working with may be a scam artist. Do the research on each potential lending source that you are working with. And certainly do not give personal identifying information, pay upfront fees, or purchase some form of fraudulent insurance until you’ve done enough due diligence on your lender. You may also do a search for an individual’s photo on the internet to see if it appears in multiple places on the web under differing names. If you are about to be taken by a loan scam, take a few steps back and ponder the 3 warning signs above. You may be glad you did.