Q&A: How do you verify that a private money lender for real estate financing is a legitimate business not a scam?
Question by Nathan: How do you verify that a private money lender for real estate financing is a legitimate business not a scam?
When dealing with a traditional bank there’s no question that you are dealing with a legitimate business. When you turn to private capital to finance a loan how do you go about verifying that the lender in question is not a con artist and that they are a legitimate lender?
Best answer:
Answer by Mike
ask the lender to provide you AUDITED PROOF that they have the capital available, and also ask for their Dun and Bradstreet rating. Honest real lenders, even private capital holders, will be glad to prove to you they have the capital they are offering.
What do you think? Answer below!
You can also call your local District Attorney’s office. They will let you know if they are licensed with the state.
There are only 2 possible ways.
Call references and hope that they are telling you the truth.
Demand that the entire sum be placed in a neutral place (escrow) one week before you need it. Then you can be guaranteed that it exists. You would have to pay interest for that week, but it would be worth it.
One of the biggest private lenders in Phoenix had 18 loans waiting to be funded when they closed their doors. No advance notice. All the buyers had their earnest money at risk.