Beware of Lenders Bearing Gifts
I spoke with a fiduciary last week who told me a sad tale. He needed a loan for a client, knew of our company, but chose instead to get the loan from a different lender based on slightly less expensive pricing. The "gift" presented by the lender turned out to have a bomb inside of it. The loan was not as promised.
Fortunately, the fiduciary decided not to use this lender because of his inability to provide straight answers to his questions and his inexperience. Every couple of years we come across new competitors who compete on price; this has been the case during my entire 20+ years' experience. Be wary of the inexperienced Lender/Broker/Arranger attempting to enter the fiduciary loan business in California. These brokers are seeking new markets because many "flip and fix" borrowers are disappearing from the broker base as these borrowers now can get funding from institutional lenders (backed by Wall Street and Silicon Valley).
These Lender/Broker/Arrangers are hunting for new markets, but do not have the experience, software or legal background to make loans to fiduciaries.
The "gifts" they bear promised lower pricing, come at a cost of time delay, incorrect documentation, and lack of knowledge that could adversely affect you and your client. A small additional cost can be worthwhile to deal with a reputable Lender/Broker, like me, with 20+ years of experience dedicated to serving the fiduciary client and trust & estate community.
Please check for the following items when dealing with any lender attempting to arrange a loan to a fiduciary:
- Is the Lender/Broker/Arranger licensed, by both the State of California and the Nationwide Mortgage Licensing Registry and System (you wouldn't use or recommend an unlicensed attorney or professional fiduciary)?
- How many loans to fiduciaries have been made?
- What experience exists in making specific fiduciary loans (ie, court ordered loans or property tax reassessment strategy loans)?
- Ask for references (fiduciaries, attorneys and judges).
Beware of the inexperienced Lender/Broker/Arranger offering lower rates or fees; the penalty for an incorrectly transacted loan could be steep; and, the cost may be too great to fix or correct.