Desperate Overseas Borrowers Taken By Loan Scams

[Corey Dutton]

In the past week, my business partner has had several inquiries for private money, non-bank loans from people overseas. One inquiry came from Europe, one from Kenya, and another from India. In all of these cases, the prospective borrowers had been taken by a loan scam for $1,000 or more.

My partner inquired further about the loan scams that these 3 prospective borrowers had been a victim of. All of these prospective borrowers were seeking loans for real estate development projects in their Countries. In all of the incidences, the loan scammers immediately offered up a bogus Letter of Intent and then asked for an upfront, non-refundable application fee or deposit.

What were the 3 biggest red flags that these prospective borrowers should have seen? Number one, all of the lenders were located in a different Country than the project for which they were seeking a loan. Number two, the lenders offered a Letter of Intent right away with virtually zero underwriting. And finally number three, the lenders immediately asked for an upfront fee in excess of $1,000.

If you are a prospective borrower living outside of the U.S.A. and you need a private money or hard money loan, beware. You are a target for such loan scams.

[Jon Holdman]

This is hardly limited to "desperate overseas borrowers". The same scam gets perpetrated by US based "companies" on US based borrowers every day. It may not be a perfect rule of thumb, but "up front fee means its a scam" will serve you well. Now, I well know (having just watched the refi process on my mini-storage investment) that pretty early in the process the fees do start even for legitimate lenders. But money up front is a bad sign.