Hard Money Lender - This is What a Scam Smells Like

[John Franczyk]

I'm curious if anyone has had a similar experience as this. It's clearly a scam, but the scammer went to great lengths before launching the scam part of the transaction. 

I have been looking for a $55K hard money loan to do a fix and flip. I contacted a lender that posted in a Facebook hard money forum. Everything was going smoothly and seemed to be legit, until I got the final approval notice from the lender stating that they needed me to pay a $980 upfront documentation fee.

I can understand a doc fee if it's disclosed up front and described in the negotiations as points or some other part of the loan, but this lender said nothing about a fee until we got to the final funding phase. He tells me that all we have to do is send him the fee and the funds will be wired back to me.  It seems to me that the Nigerian prince email scams are trending over to hard money now.   

I don't want to list this lender's name or contact info because I don't have solid evidence that this is a scam beyond what I wrote here. Suffice to say that he claims that he is in Yakima, Washington, but his address cannot be found on Google maps and he lists a zip code that does not exist. I pointed this out in my last email to him. He did not respond.

[Jay Hinrichs]

from my perspective basically 100% of the lenders on facebook are scammers.. plain and simple real lenders don't advertise there Is my thought process.

small balance loans are a niche.. and a reputable HML either won't do them at all ( too small ) or the fee will equal at least 10 points.. as you need to make 4 to 5k a file to stay in business anyone offering less than that for a small balance loan is probably scamming you.. and of course no up front fee expect 3rd party appraisal and maybe credit pull.. that's industry standard.. Lending home charges 150 bucks but they are for real and can be verified.. all others I deal with over the years and myself included.. no up front fees and no hanging our shingle on facebook..

it cracks me up .. they run ads like this.

loans from  10k to 20 million... RIGHT what lender does loans at 10k and 10 million... rates as low as 3.5 %  RIGHT what private money is that cheap I can't even get that cheap from my commercial bank... only owner occ full doc loans are that cheap... etc  etc .. simply a bunch of bull Sh@@@@