Top 3 Scams in Hard Money Loans

[Corey Dutton]

From a fall article in the Scotsman Guide, the popular topic of loans scams in hard money is a conflictive one, particular for those who have been the victim of one. Loan scams are a huge problem in hard money loans for many reasons, too many to outline here in this discussion. What are the top 3 scams found in the arena of bridge lending?

First of all, a hard money loan, is any non-bank loan, whether it be a private individual, an organized fund, a mortgage pool, mortgage broker, etc. Loans scams in this financing niche are a problem, as I said, and the top 3 scams found most prevalently include:

1.Fees paid prior to closing a loan: Also called upfront fees, there are a lot of fake lenders who pretend to be funding loans but instead are having borrowers pay upfront fees. Ever seen the movie, ‘American Hustle?’ This is an example of an upfront fee loan scam.

2.Identity theft: This is another common loan scam whereby a group or individual will gather personal identifying information from a borrower, in order to steal his or her identity.

3.Bait and Switch: In this scam a legitimate lender provides terms to a borrower but then changes the loan terms right before closing.

To learn how to avoid the most common scams in hard money lending, read the entire article on Scotsman Guide at the link below.

What other scams are you seeing in hard money these days? Please share your insights below and comment on this discussion.

(Article Source: http://www.scotsmanguide.com/Commercial/Articles/2014/09/Avoid-Bridge-Lending-Traps/)

[Mark Esposito]

Origination fees are legit but should be rolled into the loan after its approved and are paid at closing.

If the deal doesn't close no origination fees are due.