Vetting a potential lender
Member since 2018 · 6 posts · 6 votes
I have a potential first brrrr home and i posted a question about it early on on the bigger pockets Facebook page. Well, I want to start getting prepared to look for a hard money lender if possible, and on my Facebook post I had someone reach out to me and say they do specific brrrr loans- where it's funded into an LLC, and it's a "fix to loan" product. Sounds great! But I am not sure how to go about making sure this person is legitimate! I don't see their name (as written in Facebook/their website) on here, and I couldn't find any reviews. But I'm not sure if someone that isn't a typical mortgage broker would have as much of an online presence? Would they have easily verifiable credentials? Sorry if this is a completely niave question, but after poking around online I thought I'd ask the experts!
There are a lot of hard money lenders out there. Unless you have an established relationship with any of the private lenders, I will recommend to contact several and get a feel of their fees and process. Shop around. If they ask you for large sums of money upfront (like over $2,000) then be aware as it maybe a scam.
There a few advertising here.
@Janelle Vigario There is so much fraud online that if this person initiated contact with you and you haven't met them in person, I'd start with the assumption that they're probably not legit until proven otherwise. I definitely wouldn't send them any of your personal information and/or money for any reason.
As for how to check if they are legit, ask them if they are licensed. And I don't mean a driver's license. For some reason, some of these scammers want to send you a picture of their hand (or someone's hand) holding a driver's license as if to prove they're legit. As if that means anything. I guarantee it's never their driver's license that they're holding and no legitimate lender would ever do that.
Anyway, if they say they are licensed, ask them what their license number is and what name they're licensed under (and what name they lend under in case that's different).
You should then be able to verify their license with the regulatory agency in their state and also likely here: http://www.nmlsconsumeraccess.org/. (The NMLS has a list of all the state-licensed and registered mortgage companies, branches and mortgage loan originators in most states. You can see a list of all the participating states here: https://mortgage.nationwidelicensingsystem.org/consumer/NMLS%20Document%20Library/NMLS%20Consumer%20Access%20State%20Participation%20Chart.pdf.)
Lastly, another really good way to verify if they're a legit lender or not is just to ask them where they've previously done loans, and then check with the County Recorder in that county and see if there is any record of them being named on deeds/mortgages, which can usually be done online in a matter of minutes. If they're actually funding loans, there should be a record of it.
I have a potential first brrrr home and i posted a question about it early on on the bigger pockets Facebook page. Well, I want to start getting prepared to look for a hard money lender if possible, and on my Facebook post I had someone reach out to me and say they do specific brrrr loans- where it's funded into an LLC, and it's a "fix to loan" product. Sounds great! But I am not sure how to go about making sure this person is legitimate! I don't see their name (as written in Facebook/their website) on here, and I couldn't find any reviews. But I'm not sure if someone that isn't a typical mortgage broker would have as much of an online presence? Would they have easily verifiable credentials? Sorry if this is a completely niave question, but after poking around online I thought I'd ask the experts!
I think @Roman L. has a good point about upfront fees. That's about the easiest way to tell if it's a scam or not. If the lender/broker is asking for a ton of money up front, run. There are costs associated with loans that should be collected up front like the appraisal, but any more than $995 up front and you should run. To @Kyle J's point, many companies in this space are not licensed and looking them up on NMLS won't help you. It's not a terrible thing to not be licensed; it's not required in most states.