PRIVATE LENDER. COST ME $100's - Posted by Arthur Montano

Posted by JPiper on December 03, 2000 at 08:32:25:

Sorry about that! Guess I misread your post.

OK, so what this boils down to is that the lender dropped the ball in doing the survey…and you didn’t monitor the situation closely enough. So you couldn’t close.

Personally, I might have considered paying the extra $500 fee (but only out of the loan proceeds) if I had a firm commitment regarding the loan, and only after I tried to negotiate this down or out of the deal. You certainly had ample equity there to pay the fee and pay the extra costs for the delay in closing. You might not have like it, but then again, it looks like it is a good deal assuming your numbers are right.


PRIVATE LENDER. COST ME $100’s - Posted by Arthur Montano

Posted by Arthur Montano on December 02, 2000 at 20:57:05:

Recently, I had an occasion to deal with a local private lender that promised me that he could deliver the purchase price plus the rehab money within one week if I had a an after repaired appraisal of .65 LTV. I put up the $500.00 deposit and $300.00 for the appraisal and had it all done 10 days prior to closing. This private lender (let’s name him Joe) advised that all was in the works and he would take care of the survey and bug inspection. After several calls during the week to “Joe” he assured me that all was well. The day before closing I called “Joe” to advise him of the closing time the next day. He then advised that he hadn’t received the survey results. I called the surveyor and he advised that “Joe” had never called him. I then called “Joe” and told him what I found out. “Joe” then admitted that it had slipped his mind, but that I could ask for an extension. I advised him that the contract had a stipulation of a $75.00 per day charge if not closed on time. “Joe” then said sorry, but that if I didn’t have the money for the extension he would advance me the money to close but that it would only be right of me to pay him a $500.00 fee for his troubles.
Am I wrong in assuming that If “Joe” said he would
close by a certain day that he should without an additional fee to me if he was negligent in getting everything in order as he promised? His rate was 15% plus 5 points.
I lost the house because he could not give me a exact time or date when he would be close, and I couldn’t afford to take a chance on someone that I was losing my faith in. Here are the numbers: Cost of REO $25000
Coast of repair $17000
Apprisal after fixup $78000

Does anyone know of any private lenders that are true to their word?

Re: PRIVATE LENDER. COST ME $100’s - Posted by Ben (NJ)

Posted by Ben (NJ) on December 03, 2000 at 08:32:24:

I’m a little confused. What was the $500.00 fee for?
For giving you an extension on something he screwed up to begin with? What state are you in?

Re: PRIVATE LENDER. COST ME $100’s - Posted by JPiper

Posted by JPiper on December 03, 2000 at 08:08:33:

What I would have had a problem with at the outset was a $500 deposit. What was this for? Personally I would not pay this type of “advance fee”, but if I did I would want some type of written agreement concerning the deposit. To me that was your first mistake. If you don’t do the loan through no fault of your own, you’re out $500.

I’d say your next mistake was not assuming more control over the process. It shouldn’t take much time to get a survey and termite inspection, and they could have easily been ordered by you. But clearly if this guy was of a mind to not make the loan and simply hook you for the $500, whether the survey was done or not, he still might not have made the loan. Another good reason to either not pay advance fees or have a written agreement concerning the advance fee.

If this lender gave you a written commitment subject to certain things, which he stated he would do, and you have proof that he didn’t do those things, then it might be possible to sue him in small claims court.

On the other hand, if you have nothing in writing and everything was done verbally, then you probably don’t have much of a leg to stand on. If this is the case, consider it a lesson learned regarding advance fees. By the way, I’m not talking about the appraisal fee, just the advance fee.


Re: PRIVATE LENDER. COST ME $100’s - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on December 03, 2000 at 07:30:31:


It sounds to me like joe needs to have a FORMAL COMPLAINT filed against his mortgage brokers license. He caused the delay and then he asked for another $500 fee for his negligence. This boils down to demanding a fee that he is not entitled to. End result is that he cost you the deal, and that (your profit) is what he should have to stand good for. Perhaps he has errors and omissions insurance that will pay off on his foul up. Some states require this.

Bottom line go to the state agency that issued his license to be in the mortgage brokering business.

Re: PRIVATE LENDER. COST ME $100’s tell us more - Posted by AnnNC

Posted by AnnNC on December 03, 2000 at 01:28:52:

Thanks for posting this interesting situation.
I am trying to learn from it…

You say you put up $500-where? In escrow? and what were the documents /escrow agreements to protect you?
I’m thinking that NONE of this should have been in the hands of the private lender. He/she should not control
any of the mechanics, just be advised of them, not
be responsible for the sheduling of them. Yes, back out, if not to his investmennt standards, but not hold up the proceedings.
It seems to me that you lost control of your deal, and
that there is a possibility that the private lender did this on purpose and went around you–just wondering if this could be the case.
Was the $500 he thinks you owe him the same $500 that you put up?

The problem seems to be in your contract not having covered all the possibilities.
It also seems that “Joe” was resonsible for the delay and that he should be the one coming up with the
$75/day, not you. This is the part I don’t understand:
why is he “advancing” you the money to close, when he is responsible for it not closing? This makes no sense to me.

I hope someone will clear this up: is this customary for a private lender to schedule a bug inspection? or
rather, as I had thought, to expect the borrower to do all the work,
present all the documention as to bugs, roof, lead,
rents, etc. to the lender,

Honesly, one interpretation could be that he just delayed and let it fall through in order to take the deal away from you. I’m very interested in learning if this was in fact the case or just a matter of reeely bad contracts, In any event, why let the inspections
be in his hands? This part seems to leave you out of the loop, whereas, you are supposed to BE the loop!
You must be in control of every item that has to do with the closing,
This almost feels like a conventional loan where you
are in the dark until the last minuite. That’s not the
way it’s supposed to be, with your being the creative
investor, no?

Also, what did he mean by saying he could deliver the purchase price in one week? What was the "one week"
all about? Was that to keep you from shopping?

I’m real interested in this as you can see, I’d like to
learn more about the time frames that were proposed to
you and how/why they actually played out.

It never hurts to give us more details…I just can’t see from your post where you did anything to delay the
Did you do this with a title company?


Re: PRIVATE LENDER. COST ME $100’s - Posted by Jack Compton

Posted by Jack Compton on December 02, 2000 at 21:36:48:

Arthur, if that private lender is one of them on my list, please let me know. I don’t want any of the people visiting our board to get taken for a ride. Thanks! —Jack

Re: PRIVATE LENDER. COST ME $100’s - Posted by Arthur Montano

Posted by Arthur Montano on December 03, 2000 at 23:49:16:

The $500 was the escrow amount required by the bank. I’m located in Fla.

Re: PRIVATE LENDER. COST ME $100’s - Posted by Art Montano

Posted by Art Montano on December 03, 2000 at 08:14:12:

This $500.00 was not an advance fee to the private lender. It was the escrow amount the REO bank required.