How to Avoid Lending Scams
11 Feb 2012 | 1 Comment | posted by Corey Curwick | in Hard Money
Mortgage scams and other lending scams are common in today’s tight credit markets. Banks aren’t lending and everyone is looking for private money loans to fund their investments and businesses. When the market demand is high for anything, there are always crooks in the marketplace that try to rip their customers off. In private money/hard money lending, there are plenty of lending scams everywhere you look. Here are 3 tips for avoiding popular lending scams:
- Run away from fee collectors: A lending scam is usually present if high, upfront fees are paid directly to the lender. A client asked me about hard money lenders in Utah and specifically about a lender I had never heard of. I suspected the reason I had never heard of this lender is because they are a lending scam that charges hefty upfront fees. The client confirmed this and said they asked him for $3,000 to underwrite a loan. This hard money lender in Utah is obviously running a lending scam so run away fast! Read more..
6 Steps To Close a Hard Money Loan Fast
4 Feb 2012 | No Comments | posted by Corey Curwick | in Hard Money
Because every hard money lender has different requirements, it is difficult to say all the items you will need. However, the good news is that there are standard items you’ll need to close a hard money loan fast:
- Find a Good Hard Money Broker: A good hard money broker is your friend because he or she already knows the real hard money lenders from the fake lenders and can steer you in the right direction for a fast hard money loan. This is not to say you should go to your standard mortgage broker for a hard money loan though. A standard mortgage broker is just going to send you to a hard money broker anyway and you’ll be paying double the loan fees because you’ll have to pay the standard mortgage broker a fee for referring you.
- Have a Preliminary Title Report ready: A hard money lender always wants to see clear Title to a property before lending on it. You can get a Preliminary Title Report or a “PR” from the Title company that will be handling the escrow for the seller of the property. If it’s a refinance loan, find a local Title company to obtain one.
- Get Your Property Documents Together: If it’s a rental property, you’ll need copies of the leases. Apartment complexes will need rent rolls and an Income Statement that shows the income and expenses for the property. Most lenders want to see an Income Statement for 2 years on the property. Read more..
Top 4 Scams in Hard Money
24 Jan 2012 | 3 Comments | posted by Corey Curwick | in Hard Money
There are a lot of bad hard money lenders
in the private money lending space. Because it is not regulated as much as the banking industry, hard money lending has its share of scam artists. Below is a top 4 list of scams to watch out for when looking for a good hard money lender.
- Fee Collector: When a lender asks for an upfront fee for a sum of more than $1,000 this is probably a scam. There are a lot of hard money lenders who make money from charging upfront fees, and not by actually making loans. These hard money lenders are often called, “fee collectors.” Although there are exceptions, scams in hard money are usually found when a lender is charging $1,000 or more to give you a loan. Sometimes a lender will require an appraisal or site inspection as a final underwriting condition for giving you the loan. However, in most cases, this type of upfront fee will not be more than $500 and will typically be paid for a third party service.
- “Bait and Switch” Lender: The lender promises the borrower a low interest rate and a low fee loan that seems too good to be true. Right before funding the loan, the lender may give the borrower a less desirable loan term, at a higher interest rate. This is called “bait and switch.” Read more..
What Is the Difference Between a Hard Money Lender and a Fee Collector?
15 Jan 2012 | No Comments | posted by Corey Curwick | in Success
AAs with any type of business, there are good companies and there are bad companies. It is the same thing with private money lenders. The “bad” lenders are commonly called, “fee collectors,” and in fact aren’t really lenders at all. These are lenders that may give a loan here and there but will make most of their money from collecting upfront fees from their borrowers with no real intent to make a loan to them. (It is usually when you’ve been turned down by everyone else for a loan and a private lender suddenly comes forth with a very fast answer of ‘yes.’ If it seems too good to be true, it probably is!). These upfront fees could be called application fees, review fees, analysis fees, evaluation fees, preliminary underwriting fee, and commitment fees.
Then there are the “good” lenders that make money by giving loans, and not by collecting upfront fees from clients. A good private money lender may provide you with a Letter of Intent that sets forth the terms of the loan. If you agree to the terms set forth in the Letter of Intent provided by the lender, then you may have to pay for a small site inspection fee or appraisal fee etc., but typically no more than $500.
If you search online, you can sometimes find out if a lender is a fee collector by simply typing in the lender’s name and then the word “scam” or “Rip off.” However, make sure you look beyond the first page of a google search to find dirt on a bad lender. Some lenders will use a trick of trying to cover up bad online press with stories or other articles that will serve to bury the bad press on the 3rd or 4th page of a google search. Most people don’t bother to read the search results founds on the 3rd or 4th page of a google search so make sure you do your homework. Read more..
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