Real Estate Investing Forums

Real Estate Investing => Financing, Hard Money Lenders, Private Money => Topic started by: pauly99 on January 10, 2006, 02:47:22 pm

Title: Beware of unscrupulous lenders
Post by: pauly99 on January 10, 2006, 02:47:22 pm
Beware of unscrupulous lenders

Permission has been granted by REIClub to make this post. All statements are of fact.

First of all, I have to say that most lenders that I’ve dealt with or spoken to in the past provid a great service to homebuyers and investors alike. There comes a time when you get the REI bug, you’ve read through the forums, read multiple books, spoken to a mentor or two, and make your first offer…. or two. That was my case. I hadn’t lined up my team yet (lenders, title companies, contractors, attorneys, etc…) but I couldn’t stand back any longer when I was finding deals that made sense. Heck, I was willing to make the leap even without a job. I was laid off from a large corporation and jobs were paying 2/3rds of what I used to make. Arghhhh.

The first property was out of state. A property that had just been rehabbed by a gentleman that had it under contract with the homeowner and would eventually pay the homeowner after rehab was complete, and after the property was sold. That is where I come in. The property was being sold for $58,500, had comps of $65,000 but better yet could be rented about $150-$200 per month above mortgage, taxes, insurance, etc…  The gentleman recommended a private lender. The application was completed, I was approved, and the sum of $500 was sent to Chris Macone (Macone Enterprises) and $500 to his consultant. You can find Chris on this forum as well as a few others on the internet.

I decided to go the same route with my 2nd property. This one seemed like an even better deal yet. The property (duplex) is in need of rehab with a purchase price of $28,500, needs about $15,000 to $18,000 of rehab and has comps of $65,000. This time Chris asked for $500 as a consultation fee.

After not closing on the first property after 4 weeks or so, we (the seller and I of the first property) started to question what was going on with the loans and the closing. Chris knew the seller was under a deadline due to arrangements made with the homeowner of the property and told the seller that the closing could happen in 2 weeks. Chris Macone assured us that everything was “going smoothly” and that the paperwork was at the attorney’s office at this time. The attorney was contacted and he stated that Chris (and/or his consultant) had sent in paperwork that did not make sense. Chris replied that he had fired the attorney. Fantastic. The seller had a deadline of February 6th and needed to close or he would lose the house and worse yet the $8000 or so that he put into the house as well as the increase in house worth. So (quick thinking), the seller conferenced Chris in with his title company. They were told that as soon as the paperwork arrives, they could close in a matter of days. Chris agreed to that. After being contacted a couple of days later to see if the paperwork had been turned over to the title company, Chris said that the original attorney was back to working on the closing and that he (Chris Macone) would no longer be involved in the closing. Hmmmm. Why?  

The attorney was called by the seller. It seems that 3 people had walked out recently on their closings. Although I did not get this first hand, it seems as though Chris was working with discounted notes. All along I asked Chris to provide details of the loan.
Look up RESPA and you will see that once the application is completed, the lender has 3 days to provide full disclosure of the loan. I sent email after email inquiring as to the fees involved with no response from Chris Macone. The attorney stated that Chris wanted the loan written for $71,250. I asked Chris who was going to get the difference between the purchase price of $58,500 and the loan amount of $71,250? No response from Chris. No response after multiple emails. The attorney would not complete the paperwork because the SFH would not appraise for the loan amount that Chris (or his consultant) suggested.

The attorney also responded that he had not received any paperwork as it relates to the 2nd piece of property that I was purchasing either. I immediately asked for a full refund of all consultation fees. I originally sent the first two money orders on 11/15/05. The second was mailed on or about 12/4/05. Obviously neither property closed. Chris refused to refund monies stating that services had been performed.

Chris may refute my statements. That is fine. I’ve saved all emails/correspondence as it relates to the attempted purchase of both properties as well as copies of money orders mailed out.

Permission has been granted to by REIClub to make this post so long as it is factual. It is factual.

I’ve filed a complaint with the Attorney General for the State of Texas because Chris Macone did not provide disclosure of the loan within 3 days of receipt of application (RESPA).

I appreciate having access to the REI forums and chat room and being able to use those tools to further my REI education. I am only making this post to make folks aware that there may be some unscrupulous lenders amongst us. Not to scare anyone or by no means to lump all lenders into one group but please ask for references when dealing with private or hard money lenders.

As it stands, my potential first investment property which needs to close by February 6, 2006 is in great jeopardy (the seller may be out of a great sum of money for both the loss of rehab money and the money he stood to make on the deal) and the 2nd investment property has a contract that expires on January 18, 2006. If anyone has ideas on how I can make this work, I'd appreciate it.

Paul Tomlinson
Title: Re:Beware of unscrupulous lenders
Post by: John_NM on January 10, 2006, 10:14:51 pm
I have a few choice words about this!!! I'm the seller to this property and the one who made the mistake and introduced Paul to Chris Macone. I did that because Chris promised a fast closing, good terms, and a low down payment but, what he didn't proceed to tell anyone was that him and his consultant sold discounted notes. Myself and Paul agreed to a contracted sales price of $58,500 on 11-15-05, Chris and the consultant created a note of $71,250 for Paul. This house won't even appraise for that much.
Finally after almost two months I told Chris I needed some answers concerning the closing. Chris gave me the phone number of the lawyer who was supposed to be handling the closing for us. I called the lawyer on Thursday (1-05-05) and he told me that he just received the paperwork. After a lengthy conversation I learned quite a bit about Chris Macone. The lawyer told me that there were several people that walked out of closing's because they were never aware of discounted notes being created. The lawyer told me that it is because Chris Macone isn't telling anyone the details concerning their loans and that they are discounted notes. In return all these people are out their money they paid upfront to Chris and his consultant. So if you are using Chris Macone for funding be aware that when you go to closing your loan will be more than the asking price and it might take you six months to get to closing.

I bought this home on a realestate contract with a balloon due in Febuary. If I don't sale this house by Febuary I stand to lose almost a 30k profit and I will lose 8k out of pocket costs for the rehab (I borrowed the 8k from in-laws). I also have two contractors screaming at me for their money that I promised them before Christmas because Chris Macone promised me that we would close in two weeks (back in November). With this deal going sour (because of Chris Macone) it has caused me other problems as well.
Chris has tried to blame me for this deal going bad by telling Paul that I withheld information, that I don't own the property and that his company (Macone Enterprises) doesn't do double closings. Chris has known since November that I'm doing a double closing. He has known every detail about my property, as a matter of fact he has known since day one everything about my property. The day I bought it he knew, as I was rehabbing he knew, when I put it up for sale he knew. Chris was someone I called a friend until all this has happened. Now since his way's has surfaced he won't call or answer any e-mails.
I would check weekly and ask him, "how is the closing going"? He would always reply "it's going smoothly". My question is if it was going smoothly sinc Nov. 15 then why did the lawyer receive the paperwork a week before Christmas?

I just want EVERYONE to be aware on how myself and Paul was treated by Chris Macone. I'm gonna tell you all straight out that me and Paul was lied to, mislead and used!!!!! Paul was cheated out of $1,000.00 by Chris Macone and his so called consultant.  

I'm not gonna let people like Chris Macone keep me down. I will be successful while people figure out  how Chris and his consultant are!!!

If anyone has any questions please post it, if you would rather PM or e-mail me you can do that too, I WILL ANSWER YOU!!!!!

If anyone has had a similar experience with Mr Macone please post it to let others know before they to get taken advantage of.  Just tell the truth and state the facts about the situation.

Paul I'm truly sorry for introducing you to Chris Macone and how you were treated and cheated. Don't give up on REI because there are people out there that will help you and not cheat you!!!

Good luck,
John
Title: Re:Beware of unscrupulous lenders
Post by: drcpr on January 11, 2006, 07:13:33 am
Hi
I'm new here & definately not an expert, but in regard to ideas, I would 1st go to the mortgage holder that holds the balloon, explain my situation & ask for an extension. If they say no or seem hesitant, offer to buy a 2-3 month extension. This will give you time to find other money sources. Most folks, would rather do this than go through the hassel of legal action against you. Even if it costs another $1-2K, it is better than loosing everything. Hope this helps.
Title: Re:Beware of unscrupulous lenders
Post by: TheMentor on January 11, 2006, 08:14:33 am
After reading that, I'm glad I never filled out any of the paperwork Chris had emailed me concerning a deal I'm trying to get done.
Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on January 11, 2006, 11:43:18 am
I'll keep everyone up to date as to the progress of either receiving monies from Chris Macone for the consultation fees that I paid (total of $1500) or closure through some other manner    :-X

I filed a complaint through the Better Business Bureau last evening. Will file a complaint through the Internet Fraud Complaint Center today (got $800 back approximately 1 year ago from a seller of merchandise that never sent a product that I purchased but willingly cashed and kept money that I sent... I think she freaked out when someone knocked on her door) and keep prodding on until I receive action.
The Internet Fraud Complaint Center (IFCC) is a partnership between the Federal Bureau of Investigation (FBI) and the National White Collar Crime Center.
Title: Re:Beware of unscrupulous lenders
Post by: Mortgage Mark on January 11, 2006, 03:12:12 pm
That sounds like a mess.  I hope it all works out for you.  

I would be wary of "consultation fees" paid before a loan funds.  I'm not experienced in hard money loans and how they work, but conventional loans pay the loan officer out from the proceeds after a loan funds.  Also be careful with LO's offering extremely quick closings.  Even if everything goes perfectly and is rushed a closing should take at least a week.  (because we need to gather appraisal, title report, borrower's documents, gain underwriting approval and draw docs)
Title: Re:Beware of unscrupulous lenders
Post by: MoneyLenderP on January 11, 2006, 10:58:42 pm
See that is very very unfortunate. I'm currently assisting a couple borrowers from REIClub. Lots of great people on here, no reason to play non sense games.
Title: Re:Beware of unscrupulous lenders
Post by: liverichly on January 12, 2006, 02:54:44 am
Sorry to hear about the situation, however I'm pretty sure hard money loans don't fall under RESPA guidelines.

Your State Representative Burt Solomons takes a very strong angle against unscrupulous lenders, just last May he signed a bill that enacted tougher measures to insure customers are protected - HB 955

http://www.house.state.tx.us/members/dist65/solomons.htm

HB 955:
http://www.capitol.state.tx.us/tlo/schedule/2005/C2702005041114001.HTM
Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on January 12, 2006, 07:50:21 am
Shane, my attorney assures me that RESPA applies. He listed the members that it applies to. In general lenders, brokers, or those providing services of a broker. He also stated that it encroaches predatory lending. After showing him emails (thankfully I kept them all), he assured me that Chris is in the wrong and that I could take action if I choose. He is also looking to see if Chris Macone (Macone Enterprises) is registered in the State of Texas. If not, we have another plan of action that Chris will definitely not like.
Title: Re:Beware of unscrupulous lenders
Post by: aak5454 on January 12, 2006, 11:16:15 am
in the course of doing my due diligence, I spent a few bucks at the Sec of State of Texas office (on-line, great webiste  BTW) and determine there are rno egistered businesses call Macone Enterprises or anything similar to that.....
Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on January 12, 2006, 11:42:47 am
aak, More of us (read myself) should act responsibly when it comes to such business transactions. Chris Macone/Macone Enterprises had the opportunity to rectify the situation and respond to emails or posts that I have made. My due diligence was not complete. I only did google searches on his name/Macone Enterprises to see of his past business dealings. I could not find anything negative about his company, so I decided to do business with him. Lesson learned.

I have this friggin trait (curse, magnificent obsession, one track mind) that when I get a certain thing in my mind that I am passionate about, I won't stop until I get it. Meaning, if I see a gnat in my house and that gnat is pestering me, I'll spend the entire day to set that gnat free. If a 300 lb. lineman was in my way, I'd knock him over to get to that gnat.
Title: Re:Beware of unscrupulous lenders
Post by: mmh on January 12, 2006, 01:17:36 pm
Being a starting Rehabber myself looking for HMLoans.....I think a an extremely good idea would be to have something like what Ebay does. IE: Have a means of networking back and forth between Rehabbers, or a section where people can give their feedback of having worked with a particular Loan company or indiviual. Keeps everyone honest.

What do you guys think ??

(BTW Just found this forum today and I like it.)

Martin Haffner.
Title: Re:Beware of unscrupulous lenders
Post by: aak5454 on January 12, 2006, 01:58:35 pm
hello pauly,

I think you might have mis-understood the angle I was coming from.  I was offer that as a bit of information  since you mentioned your were looking into this (to perhasp save you some effort and/or confirm your findings).  I also VERY SERIOUS considered using this individual/company, ut could not get comfortbale with the fact hat he was not incorporated and by his own admission had no prior experience in the ledning industry.  I worked for a couple of years as a self-employed technical consultant and had some exposure to dark, underworld of private fianancing of small start-ups (private bridge loans, etc).  I saw some real dirty delaings much like has gone on here.  

However, probably like you and many people of htis board, I believe, in the face of no negative info, that people are intrinsically honest and will do the do the right thing.  Unfortunately, too often this is not the case.

Mike
Title: Re:Beware of unscrupulous lenders
Post by: cowboybuboy on January 12, 2006, 07:16:15 pm
I was actually emailed by Chris Macone. I asked for his phone and gave me a reason that he's alway out of the office so I won't be able to reach him there. I ask for a cel phone, he won't give it to me. Instead, he gave me some stupid details on what he does. Apparently, he's a fraud. Sending me emails with attached documents that don't have any letterhead. Everytime I talk to a lender, I ask for the company's phone number, name and person's cel number. In our today's technology, it's impossible to not have at least a celphone. I usually call the person and talk to that person several times. If I can't reach him or her, I don't follow up anymore. Hope this helps in choosing a better lender.
Title: Re:Beware of unscrupulous lenders
Post by: Sannyboy on January 13, 2006, 09:51:17 am
I too am a Macone Enterprises sufferer...

I have a deal that is about to fall apart due to the misleading, unorganized and unprofessional actions of CM.  

I've learned that his business is to find people that need financing, promise them (pre-approve) a product then forward that information to a note writer and hope everything works out...usually it doesn't.

I spoke to the note writer and he is as frustrated with CM as we are.  He seems to be on the up an up and may be able to help us pull this off.

As I am new to he REI business I chalk this up to an expensive lesson learned.  If I paid attention to the due diligence lesson maybe I wouldn't be writing this.

On to BIGGER and better things


J

Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on January 13, 2006, 03:46:09 pm
J.  I'm new to the REI business as well. Sucks (for lack of a better word) that this happened on my very first two deals. So long as we concentrate 1% of our energy on righting this wrong and 99% on finding more deals, lenders, and backup lenders, we'll succeed.
Title: Re:Beware of unscrupulous lenders
Post by: John_NM on January 15, 2006, 09:35:07 am
Sannyboy,

I too am a Macone Enterprises sufferer...

Sorry to hear that, you and many more.

I have a deal that is about to fall apart due to the misleading, unorganized and unprofessional actions of CM.

I guarantee you it will fall apart, if it so happens it doesn't fall apart you will be borrowing/paying ALOT more money than you intended to borrow/pay.

I've learned that his business is to find people that need financing, promise them (pre-approve) a product then forward that information to a note writer and hope everything works out...usually it doesn't.

You are exactly right about this. He prey's on newbi's and guarantees them a pre-approved loan and doesn't bother to tell them that they are discounted notes and they will be borrowing more than they are purchasing the house for, and possibly putting them upside down in their deal before they even get to closing. He has had my home tied up for two months and if I don't sale it before Feb. I lose everthing in the deal. I can't believe Chris Macone has the heart to play with people's emotions but, most of all putting their deals at risk and risking them to lose alot of money. He just does not care!!!

I spoke to the note writer and he is as frustrated with CM as we are.  He seems to be on the up an up and may be able to help us pull this off.

I also spoke to the  note writer and he has told me alot about Chris Macone. About all the mistakes and the lack of paperwork submitted on Chris's and his consultants part. Also the lack of information Chris should be telling the buyers before the loan is submitted. The note writer/lawyer told me first hand that he invested alot of time and money in the deals Chris and his consultant submitted and at closing had SEVERAL buyers walk out at closing because they were never informed that they were involved in discounted notes and would be borrowing/paying back several thousands more than they thought. I asked Chris about what the lawyer had told me and Chris called him a liar, cheat and said he was doing illegal activities by adding money to the loan to make himself more money. Chris also told me they fired the lawyer because of his illegal/misleading work performance. Come to find out Chris Macone is the one who is misleading, lying, and performoing illegal activities.

As I am new to he REI business I chalk this up to an expensive lesson learned.  If I paid attention to the due diligence lesson maybe I wouldn't be writing this.

Yes a good lesson learned!! Did you pay monies to Chris and his consultant? If so are you doing anything to get your money back if the deal doesn't work like you were informed or lead/mislead to believe? Don't let this go do something about it, it's not right what they are doing to people.
It's not that you didn't pay attention to your due diligence, you trusted a person who calls himself and tells everyone he is a loan broker and has access to private money. When in fact all he does is pass along people's information to his so called consultant and they create a note and try to sale it to the highest bidder for thousands of dollars more than the buyer is aware of, the buyer then goes to closing and is SURPRISED with a larger loan than they intended to borrow/pay back. That's why they walk out at closing, the lawyer/note writer explained it all to me. He seems to be very upset with Chris Macone, as we all are!!!!!!

On to BIGGER and better things

Great!!!!!!  Do not give up because one person tries to take advantage of people, that's how I feel about it anyway. He takes advantage because he doesn't properly explain in full detail what he is doing by submitting your information to the consultant and then the consultant creates a note.

EVERYONE NEEDS TO BE AWARE OF THEIR ACTIONS!!!!!

Hi Pauly99,

I'm new to the REI business as well. Sucks (for lack of a better word) that this happened on my very first two deals. So long as we concentrate 1% of our energy on righting this wrong and 99% on finding more deals, lenders, and backup lenders, we'll succeed.


Yes it sucks this has happened to you. I know how much money you intended to make on your second deal, ALOT!!!!!
You will still succeed at REI, your motivation and desire is through the roof. You will be in business years to come but, Mr. Macone will be lucky to make a dime in REI if he keeps misleading and lying to people.

Good Luck,
John
Title: Re:Beware of unscrupulous lenders
Post by: richard j on January 15, 2006, 11:25:41 am
Can someone explain to me what you mean buy dicounted note? That is the only part I don't understand.
Title: Re:Beware of unscrupulous lenders
Post by: tedjr on January 15, 2006, 04:47:43 pm
Howdy RichardJ:

In this particular deal the note amount would have been more than the actual cash needed to do the deal. The seller would have gotten $58,500 but the borrower would have owed $73,000. Not a good deal for the borrower and they were not even aware of it at first it appears.

I thought Chris was on the up and up with some great posts until I too was contacted and he wanted me to send the attorney/consultant $500. No way Jose. Sorry you guys learned this lesson the hard way, I too have been bitten in the past.
Title: Re:Beware of unscrupulous lenders
Post by: John_NM on January 15, 2006, 08:02:44 pm
Hi tedjr,

I thought Chris was on the up and up too. I've known Chris for several months and have talked to him on several different occasions. I never thought he was this way. I guess people will do anything to earn a quick buck these days.

Has everyone noticed that he (Chris Macone) has not even tried to defend himself.

John
Title: Re:Beware of unscrupulous lenders
Post by: rballard on January 15, 2006, 08:26:22 pm
Howdy RichardJ:

In this particular deal the note amount would have been more than the actual cash needed to do the deal. The seller would have gotten $58,500 but the borrower would have owed $73,000. Not a good deal for the borrower and they were not even aware of it at first it appears.

I thought Chris was on the up and up with some great posts until I too was contacted and he wanted me to send the attorney/consultant $500. No way Jose. Sorry you guys learned this lesson the hard way, I too have been bitten in the past.


So where does the $14,500 (73k-58.5k) go? To Macone?
Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on January 15, 2006, 09:06:46 pm
So where does the $14,500 (73k-58.5k) go? To Macone?

Exactly. Or what is done is that the note is put up on a site (such as Russ Dalbey's) and people bid on the note. I'm sure the broker of the note would then get a set percentage or fee after the bid is accepted. It is perfectly legal except when the lender/broker does not give full disclosure by providing a good faith estimate. That was the problem with the two loans that I was trying to get through Chris Macone (Macone Enterprises).  He had one loan in hand for 7 weeks or so and another for nearly 5 weeks. Now, compare that to the following.

I just applied for a loan for a SFH on Wednesday of this week. On Thursday of this week I received an overnight Fedex package with a prepaid overnight envelope to allow me to send the signed information back to the bank. I filled out the forms and sent the overnight back to the bank. The good faith estimate included most of  the following items.

Property appraisal
Inspections
Survey
Recording fees
Transfer taxes
Title Search
Loan Application Fee
Credit Report Fee
Hazard Insurance Premium
Flood insurance

The bank also included 3 separate quotes to look at to determine what was best for my situation. 20% down, 10% down, and a fees rolled into the loan program. The number included the total payments per month, with taxes and insurance included for each choice as well as the total cost overall cost of the loan.

An investor usually wants to put as little down as possible. I thought that I was going to get that by going through Chris Macone. If Chris would have provided full disclosure through a good faith estimate or better yet told investors what he was doing, then we could have decided from there. As REI investors our goal is to make money. Chris Macone didn't treat us like investors but rather as a way to make a quick buck.
Title: Re:Beware of unscrupulous lenders
Post by: JeffInCT on January 17, 2006, 06:55:00 pm
I'm not any smarter than any of you. But some of us see easy money and follow blindly.  When the character in question (CM) asked me for my SSN via e-mail....  I put on the brakes right there!

No way!

Sometimes we see the dollar signs and miss the red flags.

I would be surprised if any of the regulars on here would have recommended someone pay an up front fee for a loan.

If ever in doubt. ASK ASK ASK.

Has anyone reported a satisfactory experience with Chris?



Title: Re:Beware of unscrupulous lenders
Post by: John_NM on January 17, 2006, 09:34:50 pm
JeffInCT

Quote
Has anyone reported a satisfactory experience with Chris?


Not to my knowledge. I asked him at one time if he had closed any deals yet, he said a couple. But couldn't provide any names or numbers.

John
Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on January 19, 2006, 06:36:06 pm
John, I know that Chris Macone had more that several people (from the IM's that I've received) strung out for 6 weeks or more without providing a loan. I just received information from the Office of Consumer Credit Commissioner for the State of Texas who stated that neither Chris Macone nor Macone Enterprises is licensed through the Savings and Mortgage Loan Department within the State of Texas.

At this point I've filed complaints through the Better Business Bureau, the Internet Fraud Complaint Center, the U.S. Postal Service, HUD, the Mesquite Texas police department, as well as a couple of other agencies.
Title: Re:Beware of unscrupulous lenders
Post by: John_NM on January 20, 2006, 06:33:17 am
Paul,

I can't believe he has the heart to string people out like that (he has our deal strung out for like two months), not only that but lie and mislead them too. Especially beginners, he can really ruin people's chances in REI and make them quit before they even begin with his stupid way's of trying to take advantage.

Keep doing what you have to do to get him to stop doing what he's doing to people. If I could file a complaint I would but, since I was the seller I can't do anything. If you need a signed statement or anything that I can provide you let me know and I would be glad to provide it for you. He has to be stopped.

John
Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on January 30, 2006, 03:56:58 pm
John, As of now I've filed a complaint with the Internet Crime Complaint Center, the Attorney General of Texas, the Better Business Bureau, the Mesquite Tx Police, and I've just spoken to the Chairman of the Subcommittee on Consumer Protection (National Association of Mortgage Brokers). He said that he may be able to push some buttons and get the U.S. Attorney General's office to look into this one.

Oh yeah. I've also written a letter to the Dallas Morning News as a followup to a story they put out on December 17, 2005.

Chris Macone could have easily made all this go away by being upfront or by refunding the "consultation" fees as I've requested. His choice is simply to ignore the situation.

I've given Chris 5 days to respond to my latest email and return the so called consultation fees. If that does not happen, the chairman from the National Association of Mortgage Brokers said that he would be more than happy to help.  

Title: Re:Beware of unscrupulous lenders
Post by: aak5454 on January 30, 2006, 04:09:02 pm
maybe he can be roomies with Ken Lay and company.... ;D
Title: Re:Beware of unscrupulous lenders
Post by: JAAMJK on January 30, 2006, 05:11:54 pm
This is a terrible chain of correspondence and unfortunately something that happens in the lending industry more than you would think.  RESPA does apply.  I too am new to the chat room but not new to lending nor the lending industry and can tell a life time of stories about folks that have been used and cheated.  I can see how a chat room can open folks up very easily for this type of thing.  My advice, always be cautious regardless of who or where the referral comes from.  

I would not be suprised to see these folks set up in another state and start all over again.  Being part of indutry reform initiatives here is what I would hope we would all do:

1.  Make sure you file a complaint with the State boards that have jurisdication over lending pratices.  This information quickly falls into data bases and alert systems that are accessed by other States and lenders.  You may not be able to help your situation but you may be able to help others through shared information and education.  The consumer is the best watchdog not the industry.

2.  Never pay up front fees.  Only on larger commercial deals would I think this is acceptable and that fee should be in line and correspond with the industry.  Due diligence on large deals is costly and we cannot blame a lender for wanting the client to help cover the cost.  But upfront fees on residential loans should be minimal.  When a lender tells you that it covers the cost of an appraisal then pay for the appraisal COD to control the fee.  If they say it covers title then tell them to wait and order title once the loan is committed.
I would not pay a consulting fee on a residential loan and never pay a fee where there is not tangible value in exchange.

3.  Research the company.  It only takes a phone call or a quick search on line to access license brokers and bankers.  Do a reverse phone search on line or a yellowpage search and make sure the company is there.    www.searchsystems.net will lead you to all public access sites for each state.  Most will list the licensing for real estate and lending professionals.  You can also look in the Corporations section to see if the business entity is listed and often access the registered agents and owners.  Being part of numerous Quality Audits and Fraud Prevention Processes, if the phone number cannot be verified, the business address cannot be verified, the license cannot be verified and the business cannot be verified then there is something wrong.  Always be alert for the red flags and maybe a permanent part of this website should be dedicated to educating folks on these things.

4.  Beware of loan structures that are strange or unordinary.  That is not to say that some lenders do not have creative touches but if the structure is strange and you cannot find the company, then it is probably not a sound decision to proceed.

5.  There are plenty of good, concerned people in the lending industry.  Find a few that you can trust and are concerned for your well being and stick with them.

I would appreciate anyone that runs into a problem like this to make it public and let it be know to all you can.  Once we hear about these things we quickly drop the information into our network to protect others.  These folks will not go away and will pop up somewhere else.  
Title: Re:Beware of unscrupulous lenders
Post by: Propertygirl on January 30, 2006, 08:48:31 pm
Soon all lenders will have to be licensed just like appraisers and real estate agents. That will stop part of what we are seeing.
Good Luck Paul and I am sorry you had to go thru that.
It makes even the good ones look bad.
Title: Re:Beware of unscrupulous lenders
Post by: John_NM on January 30, 2006, 09:16:54 pm
John, As of now I've filed a complaint with the Internet Crime Complaint Center, the Attorney General of Texas, the Better Business Bureau, the Mesquite Tx Police, and I've just spoken to the Chairman of the Subcommittee on Consumer Protection (National Association of Mortgage Brokers). He said that he may be able to push some buttons and get the U.S. Attorney General's office to look into this one.

Oh yeah. I've also written a letter to the Dallas Morning News as a followup to a story they put out on December 17, 2005.

Chris Macone could have easily made all this go away by being upfront or by refunding the "consultation" fees as I've requested. His choice is simply to ignore the situation.

I've given Chris 5 days to respond to my latest email and return the so called consultation fees. If that does not happen, the chairman from the National Association of Mortgage Brokers said that he would be more than happy to help.  



Keep it up Buddy, do not give in. He deserves everything that is about to happen to him. I feel he preys on beginners and takes advantage. I don't know how he has the heart to do what he does. You're doing the right thing so keep it up. I wish I could file a complaint but, I can't. Even though I was the seller I can't do a thing.
Title: Re:Beware of unscrupulous lenders
Post by: wisconsin investor on February 01, 2006, 04:28:35 pm
Please contaxct me!   everything you wrote is exactly what happened to - i too lost $1,000.  i filed a complaint with Texas Savings and Loan department who was very imnterested to know that both Chris and Eugene Newton (his accomplice) are accepting application fees without being licesned in the state. I am hoping to at least get my $1,000 back.  if you want to join in, write to me.

Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on April 26, 2006, 06:23:39 pm
As a followup I am inviting all that have been scammed by Chris Macone to please step forward and file a complaint with the Dallas Better Business Bureau. I've found within the last couple of months that the BBB tends to write off a single complaint about a company unless they are pushed. I was notified this morning that another individual has filed a complaint with the Dallas BBB and I've received several PM's from others that have had similar situations in their dealings with Chris Macone and Macone Enterprises. Although you may not have seen him frequent this message board, he is still advertising on other other forums as a note broker and I for one (and I hope there are many) would like to see him stopped.
 
http://www.dallas.bbb.org/complaint.html
Title: Re:Beware of unscrupulous lenders
Post by: John_NM on April 26, 2006, 08:14:33 pm
I would love to see him stopped. He is not any kind of broker, he's a SCAM ARTIST!!!! People need to step up and do something about it. I can't believe how many people he has scammed and gotten away with it. The reason he gets away with it is because everyone is scared to step up. If you guys want to throw money away, throw it my way. Not to some scam artist!!!!!!!!

Paul & wisconsin investor  are the only two stepping up and doing what's right and I applaud you guys on that. Keep it up and do not let him get away with it.

John
Title: Re:Beware of unscrupulous lenders
Post by: wisconsin investor on April 27, 2006, 06:56:27 am
UPDATE: I was finally contacted by the state of TX this week. the bottom line and is they now enough people who have complained to issue a cease and disist order for Chris Macone to stop all activity as a unlicensed Broker.  However, as stated by the investigator, they cannot do so with his accomplice, Eugene Newton at this time because they need more proof that he was acting as a broker.  so the real culprit will just find another Macone and keep scamming people. we need more people who were affected by this to contact the state of TX and hand over any correspondence with Newton.

Secondly, this is the limit of their capacity, is enforcing the liocensing.  In other words, all they can do is issue this order.  it's then up to us to find out if Macone continues (he still says he's done nothing wrong so my guess is he'll keep scamming others) and then if the state finds out about that now that the order is being issued, they call in the Attorney Generals office and that's where the prosecution begins.  So keep spreading the word and watch for other blogs elsewhere for those who have been scammed by this guy.

Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on April 27, 2006, 08:00:07 am
Unless Chris Macone changes his name, so long as he stays on the internet (hmmm light bulb went off to have his internet connection disconnected for fraud) we can find him. He's been on a couple of other forums and if you do a Google on his name or Macone Enterprises then you will see some of his posts (going back to February on other forums). I find it amazing that even after we pointed out what Chris was doing on this thread, he showed absolutely no remorse and joined other forums and started promoting his "services" again (malicious intent).

A very big Thank You to the few that have stepped forward. I ask those who have been scammed by Chris to take the first step and fill out the simple form with the Dallas BBB, which only takes a few minutes.
http://www.dallas.bbb.org/complaint.html

If you wish to proceed further, file a report with the local police and Mesquite Texas police department, attorney general for the state of Texas, Internet Fraud Complaint Center, USPS, and contact the Chairman of the Subcommittee on Consumer Protection (National Association of Mortgage Brokers).  

Yesterday I received notice from the United States Postal Service (Chris Macone sent receipts through the USPS) that Macone Enterprises has been added to their National Fraud Complaint Center database.

If anyone needs further information, perhaps Chris' or Eugene's phone number (I'll have to search but I've kept every single email of our correspondence), please feel free to PM me.
Title: Re:Beware of unscrupulous lenders
Post by: wisconsin investor on April 27, 2006, 08:05:06 am
to anyone, if you are looking for chris macone or eugene's email and ph # i have them both as well.

thx, for all those other services we can file compolaints with, i will file those you suggested that i haven't done so far.

Title: Re:Beware of unscrupulous lenders
Post by: pepperw2 on April 27, 2006, 11:36:20 am
Hi I am new here, love your forum.  I have been browsing for a week or so, and have finally worked up the nerve to post (you are all so knowledgable, I did not want to seem dumb)

I had to post now though because you guys are scaring me.   :).  I guess I am hoping for a little guideance.  Here is a little background:

My parents, my husband and I have decided, after many years of being in the renovation business for other investors, that the time has come to invest in properties ourselves.  We decided that between us we had enough experience to make it work (they own the business, I am actually a Sr. Buyer for a large corporation, and my husband has owned his own home restoration company of his own for years).  So we know how to do the work, know how to negotiate good buys for materials, know how to give a property "curb apeal" etc...

The knowledge we don't have however; is how "hard money lenders work".  Reading these posts are almost making me have second thoughts, because we are literally "babes in the woods" with this part of it.  We found a company that "looks" reputable,  they want us to put the repair money in an escrow, etc.  That alone makes them seem reputable to me.  Problem is, I don't think we will have the cash to do a lot of repairs and get reimbursed.  That IMO makes us vulnarable.  Does anyone have any advice for me on the best type of lender?  What should I be weary of? etc.

Any help would be great!

Thanks,
Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on April 27, 2006, 12:16:13 pm
Sorry to come off that way in this post. It is however a warning to us REI's, whether an up and coming REI newbie or seasoned veteran that there are those in the lending world that don't have your best interests at heart. Only their own. A good start for hard lenders is to look at the link below.

http://www.reiclub.com/hard-money-lenders.php

Typically (they do have different criteria) a hard money lender would like to see you get a contract on a property for 70% or less (sometimes 60% or less) of ARV (after repaired value). They may charge 4-9 points and have an interest rate of 12-18% either payable on a monthly basis or after a set period of time (ie 6 months). Usually you will need to have an exit strategy so that you can get out of the loan (refinance or sale) within 6 months to a year. They may require an application fee ($35 or so), a copy of the signed contract, some bank information and job info, as well as a detailed list of expected repairs and costs associated with those repairs.

When I was looking at a recent rehab, the company wanted me to pay for the appraisal and inspection. Unfortunately the inspection proved a couple of things that I had not planned on and made the deal not work in my favor. My loss was the application fee and the cost of the inspection/appraisal. The upside is although I had a loss from those fees, I did not follow through with what could have turned out to be a bad deal. One piece of advice is to find an appraisal company that can do a turnaround in a couple of days, rather than a couple of weeks. Other than that I would check out the link above, see if they offer loans within your state, and talk to a few companies. You'll find that some companies answer the phone right away while others don't even have an answering machine. The company that I dealt with had one phone for the entire office... oh, and don't pay any outrageous up front costs.
Title: Re:Beware of unscrupulous lenders
Post by: pepperw2 on April 27, 2006, 12:46:09 pm
Thank you Pauley!!!  No, don't get me wrong, I am glad you posted the above.  Being a Buyer I like to "figure it out" before I get myself in to anything (hence why I am here.   :))  But it is hard to figure out if you don't have any experiance in the field.  It is people like you and the other posters, that are not scared to tell others that help people like me just starting out.  I am going to go check out your link now.

One more question.  Do I have to get the rehab part of the loan from the same hard money lender, or can I opt out of that and get a separate loan for the rehab somewhere else? Credit score is not an issue. (My parents are like 790-800...must be nice lol)
Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on April 27, 2006, 02:07:39 pm
To be honest with you, I never ran into the situation of needing money from a hard money lender for the loan portion only and maybe throwing the rehab portion on a credit card. I thought about it and asked a couple of banks if they would do a conventional loan but they (my local bank) wanted 20% down on an investment property and another bank would not do a loan below $50,000.  
Title: Re:Beware of unscrupulous lenders
Post by: aak5454 on April 27, 2006, 06:02:58 pm
if you have good credit there is much cheaper money out there than HMLs.
Title: Re:Beware of unscrupulous lenders
Post by: DHLC on April 28, 2006, 01:34:55 am
For all of you that have been burned by CM and others...you have my deepest sympathies!  As a "direct" Hard Money Lender, this sort of thing REALLY makes me mad!

I want to share a couple of observations, that are in no way meant to be contradictory in nature.

1.)  There are only a few "Direct" HMLs in TX and other states.  The rest are just trying to broker the loans to either other HMLs or private investors.  What does this mean?  It means if you are using a "Broker" HML you are putting your faith in someone that does not have the ability to close your loan if it meets the criteria.

2.) True "direct" HMLs do not ask for up front fees!  Sure you have to pay for the Appraisal and Inspections up-front (either to the vendors or the lender) but this is done to ensure that those services are paid for even if you decide later not to go through with the loan.

3.) As my Grandfather used to say " A deal is worth almost as much as you paid for it".  Sure you may find a broker promising lower rates or points, but if you lose the deal because they cannot deliver a loan...what have you really saved?

4.) HMLs are private lenders making "business loans" and therefore RESPA does not apply.  Nor are they required to be licensed by the state to make loans.

Although the RESPA definition of a federally related mortgage loan applies to loans secured by residential property, the law does contain a number of important exemptions. In fact, there are seven specific types of transactions that are exempt from RESPA. These exemptions from coverage include: business purpose loans, loans involving 25 acres or more, temporary financing, loans to purchase vacant land, assumptions, loan conversions, and secondary market transfers.

    * Business Purpose Loans. After several changes, RESPA now exempts from coverage loans made primarily for business purposes. In the exemption, RESPA makes a cross reference to Regulation Z and its Commentary for guidance in determining the purpose of a loan. According to the Reg Z Commentary, issues to consider when trying to determine loan purpose include, among other things, the size of the transaction and the borrowers’ stated purpose for the loan. In most cases, this is fairly clear and you may rely on what the borrower tells you.

Temporary Financing. Another area of exemption involves loans for temporary financing. Although the term, “temporary financing” is not defined, RESPA states the term is intended to include construction loans, bridge loans, or swing loans. From this, RESPA also excludes certain types of financing from the exemption and considers these loans subject to RESPA.

For example, the temporary financing exemption does not apply to a loan made to finance construction of a one- to four-family residential property if the loan is used as, or may be converted to, permanent financing by the same lender. Second, the exemption does not apply if a lender issues a commitment for permanent financing, with or without conditions. And finally, any construction loan for a new or rehabilitated one- to four-family residential property is subject to RESPA if it has a term of two years or more.


Source: http://www.complianceheadquarters.com/Res__Real_Estate/RRE_Articles/respa_coverage_and_exemptions.html

This is important to know since you need to be very sure about your lender, as evidenced by the topic of this thread.

5.) If you know of an unscrupulous Lender or Broker...do just what you have done and run them out of the biz and warn your fellow REIs

Bottom line:  a.) Ask folks that have gone before you who they recommend.  b.) Be sure you are only dealing with HMLs who actually underwrite their loans themselves.  c.) NEVER  pay a consulting fee or other fee upfront (other than fees for inspectors and appraisers).

If you want to know who most of the direct HMLs in TX are let me know.  I don't know all of them but I do know most of my contemporaries.

Good luck....and in the paraphrased works of  the Watch Commander from Hills Street Blues... "Let's be careful out there"


Rob
Title: Re:Beware of unscrupulous lenders
Post by: pauly99 on May 24, 2006, 07:24:17 pm
Let me know if you hear of anything further. As of the last time that I checked the Dallas BBB, the site lists that the company has resolved the complaint issues. Funny, they didn't resolve anything with me. I contacted them again and let them know that I was just a little ticked off to see this result posted on the BBB and that my complaint had definitely not been resolved. I re-filed and have yet to hear a response.
Title: Re:Beware of unscrupulous lenders
Post by: ShaunG on May 25, 2006, 10:06:10 am
I just saw that this guy ripped someone else off recently for $1500 on another mesage board.  I don't see how this guy isn't being shut down and arrested?