Beware of unscrupulous lenders

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.

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?

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

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.

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

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.

maybe he can be roomies with Ken Lay and company… ;D

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.

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.

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.

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.

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

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

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.

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.

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.

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,

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.

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)