Beware of unscrupulous lenders

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

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,

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.

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.

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.

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)

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.

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

HB 955:

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.

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…

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.

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.

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.


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.

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. 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.


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.


[b]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.[/b]

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,

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

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.

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.