Loan Scams and How to Identify Potential Red Flags

With the commonness of mortgage scams increasing every day, it is vital that you stay well informed to prevent a financial loss that can result from loan scams. If you have been looking for commercial hard money loans, take a long and a good look at the possible lenders.

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You should be aware of the red flags or signs to minimize the risks of a loan scam. Therefore you should be intense on finding a legit commercial hard money lender. How do you do so?

Lack of interest in your credit history

Loan approvals with no questions asked are obviously fake. If a lender approves your loan without asking about your credit history, that is a loan scam. When you submit a loan application that fake lenders have rejected, they usually instantly provide the loan. They look for an open fee to sell you a bogus insurance policy or even steal your private identity.

Loans offered by phone

It is unlawful for companies to promise you a loan through a phone or ask for payments before they come through. Fake lenders tend to do this most of the time. When reading the emails they sent, you will see that they also lack Basic English grammar skills. This is a sign that the fake lender is from a foreign country. They are pretending to be real estate investors in the U.S. They can’t make such loans; Therefore, they try to steal your identity and make an upfront fee before making the loan.

Marketing fake insurance

An increasing problem in private money lending is bogus lenders' insistent fake insurance policies. The fraudulent lenders pose as a commercial hard money lenders and approve the commercial hard money loans with the condition of buying some life insurance policy. The only type of insurance is the Title Insurance and the Homeowners Insurance. They are only paid for when the loan is approved and closed. Other than the two, there is no other insurance. Be careful when pre-paying for any insurance before the closing of commercial hard money loans.

Always do thorough research on every potential lender that you work with. Don’t also give personal identity information to them or pay upfront fees.

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