Well the subject pretty much says it all. How do you tell if or prove that a lender is killing and then taking deals? In this instance he offered to loan on 75% of 180,000 then, as soon as he knew the address, ten days before closing changed the numbers to 170,000. Then when I said OK Ill bring more cash to closing. The next day he said well I’ve decided not to loan on the property at all. I couldn’t close and now he owns the property. How do I prove that he used me to hunt this deal? What can I do if I can prove it? More important how do I keep it from happening again?
Right now Im just bummed that I lost my first deal and my earnest money
That aint right I do not care who you are. I am sure this does happen and I would like to think that it was not on purpose but sounds like it may have been from hearing your side of the story. Have you talked since you found out that he owns it. Probably not much you can do except learn a valuable lesson. You could hire an attorney and battle it out in court. The last war I was in cost about $3000 which was cheap and involved a lot more than earnest money and a potential deal. There are more deals than money. Go get another deal and another lender.
Try using mortgage brokers that cater to investors. That way they find the money for you and make enough money as a broker they don’t need to steal your deal. If for some reason this happens again, inform the seller that your financing fell through but you want the property and so are searching for new financing. Maybe even offer a little extra for the inconvenience.
As a lender that works with investors all the time I sign a non-compete with them. After a couple of deals they never ask for it again. Be fair with your clients and they are fair with you.
I’m not sure if what this lender did is illegal or not, but it is sure unethical as all sin. I’m not sure I would waste my money suing, but I almost certainly would report him to any agency I could find that deals with this. There seems to be a major conflict of interest here, if nothing else.
I agree with Paul. Being in the lending business, non-competes are always availabel for our clients. Do not hesitate to ask. If your lender says no, then keep shopping. there are lenders out there who will sign them.
As a Hard Money Lender I find this DISGUSTING! Now without knowing anything other than what you have told there is another possible explanation.
Some HMLs do not make loans based on a mortgage, rather thay purchase the property then do a lease option to the rehabber/“borrower”. They do this because they believe this give them more control and eliminates the need to foreclose in the event of default. I don’t agree with this and in Texas I always make loans based on a Note and DOT but that could be the reason that the HML is shown as the owner.
If it is not and you are correct that they are not a “legit” HML, you need to calll them on it and let others in your market know what they are up to. They may just be calling themselves a HML so they can get the line on deals.