In my search for hard money lenders I came across this mortgage company which is funding by a hedge fund with great terms and limited credit requirements. Here’s what makes me uneasy, after submitting application and property contract, they want a 495.00 escrow deposit upon approval. This “escrow deposit” is supposedly credited back at closing.
Is the normal practice for these types of lenders? Is there anyway I can secure my 495.00 deposit in case they are scammers?
Company in Question:MGM International Mortgage Corporation Inc
Thanks for any advice,
What is the name of the company…that might help us all, help u. Maybe someone else here might have gotten burned…or better yet maybe someone has had a good expierence with them.
Use your sixth sense and if you are not comfortable, do not give anyone any money…sounds like this may be where you’re at.
Upfront money can be part of a normal process especially when they say they will credit it back at closing. That being said, use caution and make sure you read & understand everything, including the fine print.
Not sure where you found the lender but if you go to your local REIA meetings you can normally find lenders who are being used by other investors. Referrals for money lenders are a really good thing.
Brookview Financial charges $1000 or $1500 so $495 does not seem too bad. You might provide us with the name of the company. That way if anyone that posts here has heard of them they might be able to give you either a thumbs up or thumbs down.
There are several rehab lenders that charge an upfront fee for file review (understand that they have a sunk iinvestment in labor and time to review a loan request—this is done to offset the overhead associated with the front end analysis) and it is also customary that they refund the same in the event you can’t be funded.
That being said, there are also companies/individuals that charge an upfront fee with no intentions of funding anything—they profit exclusively from snaking upfront fees from unsuspecting borrowers and investors.
This is what I suggest:
a. Share the contact info. I or someone else would be in the position to share their experiences (good or bad) with the company in question.
b. Put it in writing. If they are legit, then they shouldn’t have a problem binding themselves contractually.
c. Ask for referrals. Again, if they are legit, then they must have a audience of satisfied clients. Speak to a handful of them to get an outside perspective.
Hope this helps.