Scammed by a Private Lender

[Adriana Rego]

Public Service Announcement

I was scammed by a company called Xplicit Home Loan they offered me a loan of $280K for an investment property I was looking into. They claimed to be a private money lender. After sending them all they requested (paystubs, W2, etc) they approved me for the loan at 6% with 1 point origination fee for the first deal and 2 points for any after. Once we were ready to proceed and I was under contract they requested I wire the origination fee $2800. He said after I do that the funds would be disbursed to my account. They did not and proceeded to tell me I needed to wire an additional $3600 for PPI premium insurance cost for the loan. I refused to do so as this amount should have been included from the beginning so I can send 1 wire with full funds. I told them to disburse the $280k and I would immediately wire the $3600. They said no. I then told them to refund the $2800 origination fee I wired them. They then told me to send them $480 - cancellation fee and then they would refund me. Of course I wasn’t sending these people anymore money. They have $2800 from me why wouldn’t they just deduct $480 and send me the balance. My own fault for not doing due diligence and not seeing all the red flags 🚩. I am going to go after them. Any advice would be appreciated but I will consult a lawyer I am posting this on ally the real estate groups I know I will go to the BBB also.

[Jeff S.]

Don’t spend any more time or money on this, @Adriana Rego. Your money is gone, and no lawyer will be able to help. The BBB has been exposed countless times in the media and will give anyone a high rating so long as they pay their fees. Take your lumps, be happy it was a relatively small amount, and move on.

There is no such thing as an insurance policy that guarantees a private loan. Don’t I wish.

There is never a reason to send money for insurance to a lender. The unfortunately named Private Mortgage Insurance (PMI) is only available for conventional loans (Fannie, Freddy), FHA, and the like. The only insurance any legitimate private lender will ask you to buy is a lender's title policy and fire/hazard insurance (or landlord ins., or homeowner ins., etc., as appropriate). These would be purchased when you close your deal. The title insurance would be paid out of the proceeds you wire to title or to your closing attorney. The fire & hazard insurance would be paid by you directly to the insurance company.

Other than perhaps an appraisal fee that would go directly to the appraiser, or a very nominal credit check fee, there is no reason to ever pay any upfront fee to a private lender. Unfortunately, you didn’t know this.

Also, legitimate lenders will only wire money to a title company, which will then send it to the seller of the property, not directly into your account.

BiggerPockets has pretty good SEO, and mentioning the name of the scammer here will likely draw a high place on search results now. Others who research these scoundrels will likely see your post. This might be the best thing you could have done to get the word out and protect others.