Beware of unscrupulous lenders

[pauly99]

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.

[John_NM]

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

[richard j]

Can someone explain to me what you mean buy dicounted note? That is the only part I don't understand.

[tedjr]

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.

[John_NM]

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

[rballard]

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?

[pauly99]

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.

[JeffInCT]

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?

[John_NM]

JeffInCT

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

[pauly99]

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.

[John_NM]

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

[pauly99]

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.  

[aak5454]

maybe he can be roomies with Ken Lay and company....

[JAAMJK]

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.  

[Propertygirl]

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.