Should I Avoid This Lender?

[John Cantu]

Hey BP,  

A lender reached out to me with what seems to be an attractive loan program. 1-15 year terms, 6 percent starting rates, even 100 percent funding. Only thing that made me hesitate was he requires a 20 percent downpayment that doesn't go into an escrow account and is apparently reimbursed once the loan is funded. I checked reviews on his services and they seemed legit so that's why I'm wondering if this is normal and just something I've never heard of before. I've got plenty of funding sources but as I stated, he reached out to me and provided details. 

Any feedback on this would be appreciated. I copied some of the conversation. Thanks!

You go through it and get back to me if you are in agreement with it so i send you my loan application form to fill up and i will start working on the loan approval

John

What is the percentage of the down payment?

Loans from $20,000 to $100,000 cost 10% of the total funds you will be needing loans above $100,000 to $500,000 cost 5% and loans from $500,000 and above cost 1%

Are you in agreement with my terms and conditions so i send you my loan application form to fill up

John

Does that down payment go into an escrow account? Everything looks good, but I’d like to look a bit more into your company before making any type of agreement. It sounds like an excellent program, and for that reason I have to do a bit more due diligence before submitting an application.

Okay. I do not work with escrow. You get back to me when you are ready

John

So the down payment goes into your company’s account and then is reimbursed at the time of the loan disbursement?

Yes but the loan has to be approved first before getting the down payment paid

[Shaun Weekes]

Originally posted by @John Cantu:

Hey BP,  

A lender reached out to me with what seems to be an attractive loan program. 1-15 year terms, 6 percent starting rates, even 100 percent funding. Only thing that made me hesitate was he requires a 20 percent downpayment that doesn't go into an escrow account and is apparently reimbursed once the loan is funded. I checked reviews on his services and they seemed legit so that's why I'm wondering if this is normal and just something I've never heard of before. I've got plenty of funding sources but as I stated, he reached out to me and provided details. 

Any feedback on this would be appreciated. I copied some of the conversation. Thanks!

You go through it and get back to me if you are in agreement with it so i send you my loan application form to fill up and i will start working on the loan approval

John

What is the percentage of the down payment?

Loans from $20,000 to $100,000 cost 10% of the total funds you will be needing loans above $100,000 to $500,000 cost 5% and loans from $500,000 and above cost 1%

Are you in agreement with my terms and conditions so i send you my loan application form to fill up

John

Does that down payment go into an escrow account? Everything looks good, but I’d like to look a bit more into your company before making any type of agreement. It sounds like an excellent program, and for that reason I have to do a bit more due diligence before submitting an application.

Okay. I do not work with escrow. You get back to me when you are ready

John

So the down payment goes into your company’s account and then is reimbursed at the time of the loan disbursement?

Yes but the loan has to be approved first before getting the down payment paid

That's a big red flag to me.  Now way am I wiring money to some companies account.  This is doesn't seem right at all.  Appraisal and credit report are the only fees that can and should be asked for up front.  Not 20% down!