Beware of unscrupulous lenders

[John_NM]

John, As of now I've filed a complaint with the Internet Crime Complaint Center, the Attorney General of Texas, the Better Business Bureau, the Mesquite Tx Police, and I've just spoken to the Chairman of the Subcommittee on Consumer Protection (National Association of Mortgage Brokers). He said that he may be able to push some buttons and get the U.S. Attorney General's office to look into this one.

Oh yeah. I've also written a letter to the Dallas Morning News as a followup to a story they put out on December 17, 2005.

Chris Macone could have easily made all this go away by being upfront or by refunding the "consultation" fees as I've requested. His choice is simply to ignore the situation.

I've given Chris 5 days to respond to my latest email and return the so called consultation fees. If that does not happen, the chairman from the National Association of Mortgage Brokers said that he would be more than happy to help.  

Keep it up Buddy, do not give in. He deserves everything that is about to happen to him. I feel he preys on beginners and takes advantage. I don't know how he has the heart to do what he does. You're doing the right thing so keep it up. I wish I could file a complaint but, I can't. Even though I was the seller I can't do a thing.

[wisconsin investor]

Please contaxct me!   everything you wrote is exactly what happened to - i too lost $1,000.  i filed a complaint with Texas Savings and Loan department who was very imnterested to know that both Chris and Eugene Newton (his accomplice) are accepting application fees without being licesned in the state. I am hoping to at least get my $1,000 back.  if you want to join in, write to me.

[pauly99]

As a followup I am inviting all that have been scammed by Chris Macone to please step forward and file a complaint with the Dallas Better Business Bureau. I've found within the last couple of months that the BBB tends to write off a single complaint about a company unless they are pushed. I was notified this morning that another individual has filed a complaint with the Dallas BBB and I've received several PM's from others that have had similar situations in their dealings with Chris Macone and Macone Enterprises. Although you may not have seen him frequent this message board, he is still advertising on other other forums as a note broker and I for one (and I hope there are many) would like to see him stopped.
 
http://www.dallas.bbb.org/complaint.html

[John_NM]

I would love to see him stopped. He is not any kind of broker, he's a SCAM ARTIST!!!! People need to step up and do something about it. I can't believe how many people he has scammed and gotten away with it. The reason he gets away with it is because everyone is scared to step up. If you guys want to throw money away, throw it my way. Not to some scam artist!!!!!!!!

Paul & wisconsin investor  are the only two stepping up and doing what's right and I applaud you guys on that. Keep it up and do not let him get away with it.

John

[wisconsin investor]

UPDATE: I was finally contacted by the state of TX this week. the bottom line and is they now enough people who have complained to issue a cease and disist order for Chris Macone to stop all activity as a unlicensed Broker.  However, as stated by the investigator, they cannot do so with his accomplice, Eugene Newton at this time because they need more proof that he was acting as a broker.  so the real culprit will just find another Macone and keep scamming people. we need more people who were affected by this to contact the state of TX and hand over any correspondence with Newton.

Secondly, this is the limit of their capacity, is enforcing the liocensing.  In other words, all they can do is issue this order.  it's then up to us to find out if Macone continues (he still says he's done nothing wrong so my guess is he'll keep scamming others) and then if the state finds out about that now that the order is being issued, they call in the Attorney Generals office and that's where the prosecution begins.  So keep spreading the word and watch for other blogs elsewhere for those who have been scammed by this guy.

[pauly99]

Unless Chris Macone changes his name, so long as he stays on the internet (hmmm light bulb went off to have his internet connection disconnected for fraud) we can find him. He's been on a couple of other forums and if you do a Google on his name or Macone Enterprises then you will see some of his posts (going back to February on other forums). I find it amazing that even after we pointed out what Chris was doing on this thread, he showed absolutely no remorse and joined other forums and started promoting his "services" again (malicious intent).

A very big Thank You to the few that have stepped forward. I ask those who have been scammed by Chris to take the first step and fill out the simple form with the Dallas BBB, which only takes a few minutes.
http://www.dallas.bbb.org/complaint.html

If you wish to proceed further, file a report with the local police and Mesquite Texas police department, attorney general for the state of Texas, Internet Fraud Complaint Center, USPS, and contact the Chairman of the Subcommittee on Consumer Protection (National Association of Mortgage Brokers).  

Yesterday I received notice from the United States Postal Service (Chris Macone sent receipts through the USPS) that Macone Enterprises has been added to their National Fraud Complaint Center database.

If anyone needs further information, perhaps Chris' or Eugene's phone number (I'll have to search but I've kept every single email of our correspondence), please feel free to PM me.

[wisconsin investor]

to anyone, if you are looking for chris macone or eugene's email and ph # i have them both as well.

thx, for all those other services we can file compolaints with, i will file those you suggested that i haven't done so far.

[pepperw2]

Hi I am new here, love your forum.  I have been browsing for a week or so, and have finally worked up the nerve to post (you are all so knowledgable, I did not want to seem dumb)

I had to post now though because you guys are scaring me.   .  I guess I am hoping for a little guideance.  Here is a little background:

My parents, my husband and I have decided, after many years of being in the renovation business for other investors, that the time has come to invest in properties ourselves.  We decided that between us we had enough experience to make it work (they own the business, I am actually a Sr. Buyer for a large corporation, and my husband has owned his own home restoration company of his own for years).  So we know how to do the work, know how to negotiate good buys for materials, know how to give a property "curb apeal" etc...

The knowledge we don't have however; is how "hard money lenders work".  Reading these posts are almost making me have second thoughts, because we are literally "babes in the woods" with this part of it.  We found a company that "looks" reputable,  they want us to put the repair money in an escrow, etc.  That alone makes them seem reputable to me.  Problem is, I don't think we will have the cash to do a lot of repairs and get reimbursed.  That IMO makes us vulnarable.  Does anyone have any advice for me on the best type of lender?  What should I be weary of? etc.

Any help would be great!

Thanks,

[pauly99]

Sorry to come off that way in this post. It is however a warning to us REI's, whether an up and coming REI newbie or seasoned veteran that there are those in the lending world that don't have your best interests at heart. Only their own. A good start for hard lenders is to look at the link below.

http://www.reiclub.com/hard-money-lenders.php

Typically (they do have different criteria) a hard money lender would like to see you get a contract on a property for 70% or less (sometimes 60% or less) of ARV (after repaired value). They may charge 4-9 points and have an interest rate of 12-18% either payable on a monthly basis or after a set period of time (ie 6 months). Usually you will need to have an exit strategy so that you can get out of the loan (refinance or sale) within 6 months to a year. They may require an application fee ($35 or so), a copy of the signed contract, some bank information and job info, as well as a detailed list of expected repairs and costs associated with those repairs.

When I was looking at a recent rehab, the company wanted me to pay for the appraisal and inspection. Unfortunately the inspection proved a couple of things that I had not planned on and made the deal not work in my favor. My loss was the application fee and the cost of the inspection/appraisal. The upside is although I had a loss from those fees, I did not follow through with what could have turned out to be a bad deal. One piece of advice is to find an appraisal company that can do a turnaround in a couple of days, rather than a couple of weeks. Other than that I would check out the link above, see if they offer loans within your state, and talk to a few companies. You'll find that some companies answer the phone right away while others don't even have an answering machine. The company that I dealt with had one phone for the entire office... oh, and don't pay any outrageous up front costs.

[pepperw2]

Thank you Pauley!!!  No, don't get me wrong, I am glad you posted the above.  Being a Buyer I like to "figure it out" before I get myself in to anything (hence why I am here.   )  But it is hard to figure out if you don't have any experiance in the field.  It is people like you and the other posters, that are not scared to tell others that help people like me just starting out.  I am going to go check out your link now.

One more question.  Do I have to get the rehab part of the loan from the same hard money lender, or can I opt out of that and get a separate loan for the rehab somewhere else? Credit score is not an issue. (My parents are like 790-800...must be nice lol)

[pauly99]

To be honest with you, I never ran into the situation of needing money from a hard money lender for the loan portion only and maybe throwing the rehab portion on a credit card. I thought about it and asked a couple of banks if they would do a conventional loan but they (my local bank) wanted 20% down on an investment property and another bank would not do a loan below $50,000.  

[aak5454]

if you have good credit there is much cheaper money out there than HMLs.

[DHLC]

For all of you that have been burned by CM and others...you have my deepest sympathies!  As a "direct" Hard Money Lender, this sort of thing REALLY makes me mad!

I want to share a couple of observations, that are in no way meant to be contradictory in nature.

1.)  There are only a few "Direct" HMLs in TX and other states.  The rest are just trying to broker the loans to either other HMLs or private investors.  What does this mean?  It means if you are using a "Broker" HML you are putting your faith in someone that does not have the ability to close your loan if it meets the criteria.

2.) True "direct" HMLs do not ask for up front fees!  Sure you have to pay for the Appraisal and Inspections up-front (either to the vendors or the lender) but this is done to ensure that those services are paid for even if you decide later not to go through with the loan.

3.) As my Grandfather used to say " A deal is worth almost as much as you paid for it".  Sure you may find a broker promising lower rates or points, but if you lose the deal because they cannot deliver a loan...what have you really saved?

4.) HMLs are private lenders making "business loans" and therefore RESPA does not apply.  Nor are they required to be licensed by the state to make loans.

Although the RESPA definition of a federally related mortgage loan applies to loans secured by residential property, the law does contain a number of important exemptions. In fact, there are seven specific types of transactions that are exempt from RESPA. These exemptions from coverage include: business purpose loans, loans involving 25 acres or more, temporary financing, loans to purchase vacant land, assumptions, loan conversions, and secondary market transfers.

    * Business Purpose Loans. After several changes, RESPA now exempts from coverage loans made primarily for business purposes. In the exemption, RESPA makes a cross reference to Regulation Z and its Commentary for guidance in determining the purpose of a loan. According to the Reg Z Commentary, issues to consider when trying to determine loan purpose include, among other things, the size of the transaction and the borrowers’ stated purpose for the loan. In most cases, this is fairly clear and you may rely on what the borrower tells you.

Temporary Financing. Another area of exemption involves loans for temporary financing. Although the term, “temporary financing” is not defined, RESPA states the term is intended to include construction loans, bridge loans, or swing loans. From this, RESPA also excludes certain types of financing from the exemption and considers these loans subject to RESPA.

For example, the temporary financing exemption does not apply to a loan made to finance construction of a one- to four-family residential property if the loan is used as, or may be converted to, permanent financing by the same lender. Second, the exemption does not apply if a lender issues a commitment for permanent financing, with or without conditions. And finally, any construction loan for a new or rehabilitated one- to four-family residential property is subject to RESPA if it has a term of two years or more.

Source: http://www.complianceheadquarters.com/Res__Real_Estate/RRE_Articles/respa_coverage_and_exemptions.html

This is important to know since you need to be very sure about your lender, as evidenced by the topic of this thread.

5.) If you know of an unscrupulous Lender or Broker...do just what you have done and run them out of the biz and warn your fellow REIs

Bottom line:  a.) Ask folks that have gone before you who they recommend.  b.) Be sure you are only dealing with HMLs who actually underwrite their loans themselves.  c.) NEVER  pay a consulting fee or other fee upfront (other than fees for inspectors and appraisers).

If you want to know who most of the direct HMLs in TX are let me know.  I don't know all of them but I do know most of my contemporaries.

Good luck....and in the paraphrased works of  the Watch Commander from Hills Street Blues... "Let's be careful out there"


Rob

[pauly99]

Let me know if you hear of anything further. As of the last time that I checked the Dallas BBB, the site lists that the company has resolved the complaint issues. Funny, they didn't resolve anything with me. I contacted them again and let them know that I was just a little ticked off to see this result posted on the BBB and that my complaint had definitely not been resolved. I re-filed and have yet to hear a response.

[ShaunG]

I just saw that this guy ripped someone else off recently for $1500 on another mesage board.  I don't see how this guy isn't being shut down and arrested?