Keep an eye on fraudulent private lenders

[Sriram Kumar Bikkina]

Hello Everyone,

I am new to RE investing and am closing a deal by end of next week. I was almost a victim of mortgage scam and wanted to share my experience here so that it can help new investors.

Background: I closed a deal based on the numbers provided by my mortgage agent in early April. But the interest rate keeps rising and by the time I signed for a property and got to pre-approval, my affordability went do a lot. So I was trying to find private lenders and found this person on a real estate investment group on fb. I tried to verify his creds and everything but no success, the name seemed very generic like first and last names of some famous people in the history.

I was offered a fixed interest rate of 4.5% for the 25 years with 10% down and 5% as a refundable fee (Red flag). I never worked with a private lender before and since I am in a tight situation I decided to try it out.

Process: Sent most of my paperwork to him including my ids and bank statement and received an approval within one business day which is another red flag.  I got a call back from this person asking me to sign the paperwork which says their board of directors approved my loan. I started to investigate at this point and found a lot of red flags and confirmed that this is a scam.

Some of the red flags:

1. Payment terms are too good to be true.

2. The domain name was registered only 10 days ago.

3. The person who called me seems to have an accent from a country that mostly does these scams.

4. The approval came within a day without doing a credit check.

5. Just noticed that the person who I was talking to had a Texas address in his initial email signature two months ago and now it is a different address. His company as well is a different name now and when questioned, he said he works with different financial institutions and it keeps on changing based on the client profile.

I am not sure if I can name the person and company here so I will avoid doing so.

What's the Scam: So, they will approve me for the loan and will ask me to deposit the 5% loan amount processing fee so that they can release the final mortgage amount to my account. Once we send then the fee which ranges from $30,000 to $70,000 they will close their website, business, email, change phone numbers etc.

Luckily I did not go this far as I stopped as soon as I received the approval letter but the damage has been done where I sent my ids to this person. Now I will have to sign up for Equifax and keep monitoring the activity on my credit.


This is a lesson learnt for me for sure and usually I would be very careful when it comes to such scams and trusting people on the internet but I did skip that part and I regret it.

So, for the newbie investors, please make sure that when you go with private lending please only use the referrals and not through some online source.