For the sake of clarity, I am using simplified round figures...
I took out a six-month hard money loan to improve a property I already owned in my personal name (paid cash) for $100,000 nominally, with 5 points origination fee and 5 points loan arrangement fee and 12% interest. The funding entity was an LLC owned and controlled solely by the loan arranger, I. e. the lender. At closing, the lender paid out $20K to me personally to pay off (with his knowledge) personal debts. At month 3 the lender paid out another $20K to my contractor, directly. I paid the lender $1000/month for each of the first 5 months, at which point he declared the loan in default due to another unrelated loan being I have with the same "lender" though funded via a different LLC being declared in default. My questions are:
1) If the same individual controls the loan arrangement, loan servicing and loan funding are not all monies whether termed "fees" or not actually interest (under Colorado law)?
2) Regardless of (1), is the APR of the loan not based on the amount(s) actually disbursed and not the nominal $100K maximum?
3) Does the answer to (2) depend or not on whether or not the full $100K was not only hypothetically available for disbursement, but was in fact held in an escrow account as claimed by the lender rather than his general operating account?
I greatly appreciate any insight from experienced investors.
Thank you.
