A hard money lender is a place where individuals can secure loans outside of the traditional methods. These lenders usually are usually funded by investors, and loans are secured based on assets rather than credit worthiness.
If for some reason you believe you have been victimized by a hard money lender, you do have recourse. An number of these institutions have been sued for predatory practices.
While a number of hard money lenders are legitimate, there are a number of fraudulent operations that will steal clients blind. The Securities Exchange Commission (SEC) has received literally thousands of complaints each year from individuals who have been defrauded.
Sadly, many people who use hard money lenders don’t bother to check them out. Several turn out to be little more than Ponzi schemes. The bottom line is, if you feel you have been taken advantage of by a predatory lender, you do have legal recourse. Speak with a lawyer who handles bank fraud for advice.
A number of phony mortgage lenders popped up in the wake of the banking scandal of 2008. Most of these shady mortgage businesses offered loans at extremely high interest rates. Once the customer begins to pay off the loan, the interest rates and the customer finds themselves facing foreclosure.
Los Angeles-based mortgage expert Julie Aragon says “all money isn’t necessarily good money.” Sometimes people believe that obtaining a loan that doesn’t require credit or income documentation is a good thing. That’s not always the case.
A number of individuals who invested in hard money operations have been scammed. Take for instance the case of the Woodbridge Group of Companies. The SEC says they scammed nearly 8,500 investors who thought they were putting their money into a legitimate investments.
A number of investors were promised to receive 5%-10% interest off Woodbridge’s commercial loan clients who were paid 11%-15%. Robert Shapiro, who had direct association with organization, scammed investors with sham companies that had no income. According to the SEC, he swindled investors out of more than $1.2 billion. The scam was discovered once investors stopped receiving payments and Shapiro filed bankruptcy.
Individuals who wish to go the hard money route are encouraged to do research. More and more of these boiler plate operations are popping up everyday.
If you believe you have been a victim of predatory lending or investing, you should contact an attorney immediately. Only they can give you the best advice on how to proceed.
Hard money lenders can be sued. If your money is misappropriated in any way, or you find you have been lied to about pertinent facts regarding your loan, you should file a law suit. Depending on the situation, you may be able to get a portion of your money back. But you need to act fast. Like anything, these types of lawsuits have a statute of limitation.
Remember, before you enter into any type of agreement with a hard money lender, understand what you are signing. Also, research the company to find out if they are just some fly-by-night operation, or the real deal.
It’s your money. Be smart with it.
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