Lender Scam: Has Anyone successfully worked with this company?

[Ndy Onyido]

Hello BP Nation.

After reading the post with link below:

https://www.biggerpockets.com/forums/517/topics/60645-lender-scams-and-warning-signs-beware-protect-yourself-

I decided to share this experience to ensure no one is being ripped off by this practice:

I met this company through a trusted TK provider I was going to buy a property from.

The lender is a broker by the name Tony O’Brien who works with/for a firm called Summit & Crowne Capital Partners. Apparently he is a broker with this firm. He also runs a company-Real Estate Lender USA with NMLS # 1473497 as indicated on their site. Company claims to do rehab financing, bridge financing etc. However, he uses this company to collect upfront ‘application fee’ of $1,950 with no caveat should the loan not materialize, only a condition that $500 will be credited back at closing.

Now here are my red flags and I wonder if this is a deliberate guise to defraud the unsuspecting public:

1.He insists on collecting this ‘application fee’ of $1,950 upfront.

2.My understanding of brokerage is that the broker is compensated by the principal. I know he is a broker because the documents/forms he sends are from Summit & Crowne Capital Partners and Peak Asset Lending.

3.In fact, other forms , like applicant’s cashflow/statement of net worth etc were from Summit & Crowne for the same transaction, although the pre-approval letter he provided was from Peak Asset Lending ! .

4.This pre-approval for which he charges $1,950 upfront from his realestatelenderusa.com website is available for free on Peak Asset Lending website. (www.peakassetlending.com)

• 5.Even the experienced TK provider who has been in the RE business for decades has not been able to get an approval for any of his clients from this lender.
• 6.Appraisals come in way below market value—the one I paid for on his site was 40% below market and the TK provider was very furious. He said this has been the trend as if it was deliberate to disqualify applicant/transaction.

I need anyone who has successfully done a transaction with this guy to provide me with details of his/her experience. I can disclose the full details of the deals we have attempted to consummate that were all still births.

My primary goal is to make sure no one is taking undue advantage of the public here.

Thanks,

Ndy

[Tony O'Brien]

This is a very disappointing posting from a very unqualified borrower. The real story here is a borrower, this Client comes to us with a property he wishes to purchase through a wholesaler. 

This Client brings us an address he wants to purchase from a wholesaler, 9007 E. 85th Terrace, Raytown Mo. 64138, the client wants a term loan on this property, we see no problem.

At this point we begin the underwriting process, and the client is going to pay the fees associated with this effort. Our effort includes, background, credit, legal, and finally appraisal. This client is a foreign national, not an issue for us but it does require an added effort because there is no social security number or credit score. Keep in mind we are now doing a non-recourse loan vs. the standard recourse loan. This is also added effort because there is more due dilligence with the Clients native country. 

Now the good news, we approve the client, no problem we can make the loan, the last step is the appraisal and this is where the client runs into trouble. Let's do some background on the property. If you google this address you will see it is in a difficult area, Raytown MO., but we are able to lend in this market. Keep in mind, conventional lending can't "redline" private money can, this means we can decline a property because of the neighborhood it is located, the price being paid to purchase or any other factor. So the Client who is complaining here is trying to pay $76,000 for a property that was bought by the wholesaler for $39,000 shortly before, great deal for the wholesaler, bad deal for the buyer who is trying to borrow money from us to purchase this asset. Furthermore, the comps in the area used by the appraiser are coming in at $58,000. 

As investors we are looking to buy a property that meets or exceeds the appraised value, right?  No one in their right mind would push to buy an asset that is worth $20,000 less then the appraised value.  On the lending side we are not going to lend based on the purchase price but the appraised value, we all know this, correct?  So this is the buyers delemma, he has to now bring the balance needed to pay $76,000 to the wholesaler vs. what I said I would led him. This entire process took two months. Why, because the wholeseller kept telling us the lender and the Client they would produce new comps to prove the appraiser is wrong, of course after two months they never do come forward. 

Now let me ask you, savvy investors, did we do what we promised? Of course we did, we honored our loan committment, at the appraised value, everyone knows the loan is based on appraised value not contract price. 

As a wholesale lender we sell every loan, most lenders today sell every term loan, even major banks. There is no money in servicing unless you operate that type of organization. The loan on my home has been sold 4 times since inception. Our fees are spelled out in the term sheet, the Client is paying for the hard work we must do in order to arrange our line of credit and the back end to accept the loan once it has been written. 

This Client want to be provided all the services, the loan and the closing and not pay any money and to be lent on a badly purchased property. The lesson here, services are not free, we work hard to insure our clients are provided the money they need for their project. We don't work for free, imagine if we had done all this work for free and had the same outcome, no fault of our effort but the failure is with the novice buyer who didn't do his homework. 

In closing, all the documents I discussed here are available for review. The Client needs to understand the investment business and why the onus of success is in the quality of his purchase, not on our ability to turn a poor investment into a funded project. The one comment I stress to our clients, "we are in the business of lending money." Should I complain we never made our two points on the transaction because of his poor choices?  

The final postscript, this client came to me with another poor choice, high cirme area which I shared with him. We don't close our effort once a client fails, we honor our committment to lend funds any time this Client can bring an asset we can lend again.

Every story has two sides, this Client firmly believes he has no responsibility in this effort. To accuse us of the actions he does is a poor decision on his part. When we fail its not due to our inability to perform, it is alway the client who fails to provide what is needed to succeed.