Many of us have been blessed enough not to have been the victims of mortgage or loan fraud. It is something most brokers are rarely touched by personally. We continue to encounter brokers and clients that have been ripped of by legit sounding and looking companies. Scams have ranged from non refundable commitment fees to last minute term changes to outright theft of client information for identity theft. Most brokers I have spoken to usually say “…I know a scam when I see one...” or “….You can always tell….” The reality is that a large percentage of clients who seek out brokers are unfinanceable by banks/most lenders in the first place. A high LTV or downright weird loan request and a few No’s later… one can let their guard down and be forced to experiment. Reputation aside, you can and will most likely sued should a client lose money. Some of the brokers we have dealt with have been sued and as a broker you should take the danger posed by fraud seriously.

Case in point – Rogers Funds LLC (www.rogersfunds.com)
I rarely ever post specific names of companies but this is a must and I hope the admin lets this stay. They are supposed to be a hard money lender but they are actually a scam. I came across them about a year and a half ago, when a client of ours tried dealing with them, got nowhere and then asked us to broker his loan with them. Hoping to borrow some prestige from the investment maven, Jim Rogers, their first attempt is to pass themselves off as his fund. In late 2005 we were started to sniff around when thru a broker we learnt that another client had wired them around $10K only to have them disappear. Make a long story short, we found out what they were doing and how. The interesting part is what the authorities did after we reported them. I personally contact the New York State Attorney Generals Office, the FBI field office and state banking department and offered to help. The response from all three of them was a polite ‘we will be in touch’ brush off. Had this been a residential scam, every lawmaker/official would have leapt at a chance to make an example out of them to secure publicity. The comparison of commercial being the Wild West is true in that we have very little regulatory interference…I guess the flip side is that when something goes wrong the authorities correspondingly have very little interest. After confronting the company ourselves and threatening to hire ‘the right people’ to track the proprietors, the company simply disappeared. Their website went dead. The phone numbers were disconnected. They vanished in March of 2006. Well…as of last month they are back. Back to doing what they do best, ripping of commercial investors. There are other RE websites where I posted our research and those sites can be googled. The people behind Rogers Funds LLC actually have had the audacity to post on this website posing as a broker vouching for them. I need not say avoid them at this point.

RF aside, here are a few tips on avoiding lender scams;
- Check if the lender has a physical office and confirm location
- Be on the lookout for mismatching area codes for phone/fax or other numbers.
- Speak to someone. If you cannot establish contact before the loan, eliminate them as an option. Watch for heavy accents.
- Be wary of an amateur looking website and always match the domain name’s WHOIS info to the company’s contact info
- Be wary of the ‘we will finance anything’ types
- As for a sample of recently done deals.
- Ask for company owners, last names and state company is registered in.
- Be wary of high upfront fees.
- Ask for an explanation or breakdown of fees charged
- get technical; ask debt services or environmental report questions that a real estate professional would respond to promptly and correctly
- Ask to mail loan requests in at the location listed on their website (if the address listed is bogus, they will direct you elsewhere).
- Be wary of overly optimistic loan commitments.

As the adage goes, if it looks too good to be true, it probably is.