Commercial Hard Money – The Pigs Are Feed

Borrowers should be warned as this segment of the industry is filled with con artist, as many lenders just take the good faith deposits from borrowers and then pretend to go through an underwriting process.  It’s just a scam.  In addition, many brokers portray themselves as lenders, when in fact they are just brokers.  They “tie up” their borrowers with expensive good faith deposits, which are never refunded when they don’t perform and don’t get the loan closed.  Borrowers than have to contemplate going after them with whatever scraps of cash they have left.

Borrowers should do an extensive amount of research on the lender before anything is signed or money is wired.  Check their BBB ratings, go to their states licensing division (you can do this on line) and see if they are registered as a lender.  You will probably find other names that they do business under while you are doing this research.  Also, how long have they been in business?  Many of these lenders change names like the rest of us get our suits dry cleaned.  Keep in mind though, that some of the shadiest lenders have been around for years, so just because they’ve been around for a while doesn’t mean that they are legit.       

There are also online sites where borrowers or other brokers report their experience with lenders.  Simply by typing in their name in Google can provide some telling information as well.  Above all, commercial hard money should be avoided if possible.  This is an obvious statement, but borrowers should do everything they can to find other solutions, or be extensive with their research in finding a hard money lender that is in the business of funding loans.