I found this lender through Scotsman Guide, and contacted them in Late January about a 5M loan in Washington. I was assured that if the overall market looked good, we wouldn't have a problem getting the loan. Jim was very favorable to the project, disbursed an LOI imediately without fee's and instantly made changes from one buyer to another and told us there were no upfront cost. He constantly contacted me, and returned my calls. He even offered, as the President of the company, to push the loan a little by offering 55% of the finished value, rather than the standard 65% of the current value (this was a loan on an unfinished, residential development).
He finally did ask for upfront fee's and the amount fluctuated depending on the conversation. He said the fees would be used for the due dilligence process (i.E. Having someone fly out to WA to look at the project, hotel, car rental, gas, and per diem, inspector fees). This seemed very reasonable, and the initial request was for $3,500. However we did find flights around $500 first class to $1000, which made the amount seem a bit high.
Once we received the wiring instructions we verified with Jim that the money was refundable if it was not used. Our project was on a very tight timeline, and he was unsure if he would be able to get someone out here in time. He promised that if they got someone out here over the weekend, they could fund the deal in 7 - 10 days.instead of flying someone in, he had someone drive to inspect the property, which should have left a large portion of the money unused, and therefore refundable (no need for a car rental, or hotel, or flight, etc.). We requested the individual's job title and qualifications, and were not given them. The inspector stated he was just "self-employed" and "doing this as a favor." The inspector seemed very happy with the project, the market, area, comps, etc. Even in the current economy, the average time on market in this area is 3 - 5 months with these homes pricing in the high 400 to high 500.
Once the money was wired and the inspector came out, the calls from Jim stopped. He would not return our calls or emails, he was always at lunch or on the phone. We sent emails with additional information to support our findings on our project, and offered to answer any questions he may have. We continually tried to get a hold of him and get information on the status of the loan. Given the inspector loved the area and the project, he even wanted the builder to come and build him a home due to the quality and attention to detail with double ovens, hot and cold water outside granite counter tops hard wood floors and multiple, large floor plans, and Mr. Parent's previous assurances, we thought the loan was a lock. We had supporting appraisals, comps, and one house going under contract, with three others waiting until the deal closed to go in to contract. We offered to get those homes into contract if it would help the deal. These would have brought over 1.5M back to the lender instantly. He never asked for any information about these buyers.
On Friday, February 13, we finally got a hold of Jim by blocking our phone number so that he would answer. He assured us, again, they could close the deal by the 18th and that it was with the board. He asked that we call back on Monday, the 16th, even though it was a holiday, because he'd be working all day. On Monday we called, and could not reach him. Finally, on the day we were supposed to close, he sent an email saying he would not fund the deal, with no explination, and said he would send the borrower a letter with the reason the deal did not fund. To the date of this posting (March 3), the letter has not been received, nor has the unused portion of the upfront fees been returned.
Our biggest concerns for anyone who is going to use this lender in the future: be aware that once he gets the up front fees he will be impossible to contact, and he will not refund the money (it did say on the contract that the fees were not refundable, however he said he would refund if not used or the deal would not fund) - he has promised to do so, should the deal fail. We were told it was to be used to fly someone in from Florida - he did not fly anyone in. We were not told the person driving up was even an option until after he received the money. Jim actually stated that he, himself would fly out if the inspector came in with a favorable review, which made sense. The review was favorable. Additionally, if he had truly been trying to fund the deal, why wouldn't he have called us with his, or the board's concerns to get additional documentation to support our value? We tried to send him information and to ask what concerns they had, but were not given ANY information from him - we had appraisals, comps, etc. My impression is that this is another hard money lender who is out there to get your up front fees, with no intention of actually funding your deal.
After all was said and done, this was a short-sale project, the lender was willing to take a lesser offer, and this was new construction with built homes. Jim again promised to see if the lesser loan would work, and never got back to me with the outcome. He wasted a ton of precious time, and took me for $3,500, with no true intention to ever fund the deal. Be warned.
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