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UNREASONABLE UP-FRONT FEES

 

By Robert T. Koveleskie
President of Bizfin, LLC
 

Be careful when up-front fees are requested when seeking capital. There may never be an intent to finance. Some mortgage brokers and even some lenders, especially on the Internet, rely on up-front fees for a primary source of income and seldom fund. In no event should you pay an up-front  fee to a broker or an intermediary.

  1. Do your own due diligence on the lender or intermediary.

  2. The fee should be relatively nominal--small enough that you can afford to lose it in the spirit of the cost of doing business.

  3. The terms should be in writing.

  4. An experienced attorney should read and explain the agreement to you

  5. Know with whom you are dealing.

  6. Pay fees directly to third party vendors and not the broker or intermediary.

  7. If the fee is greater than nominal have it put in an escrow account payable out of loan proceeds.

  8. Realize that the fee may not be refunded, regardless what the agreement says. Can you afford the loss?

  9. Know that promises to get funded is a red flag.

  10. Google the intermediary, broker, and lender.

  11. Legitimate lender do not ask for an upfront fee before an application has been taken. 

  12. Don't pay a fee in promise of getting financed.

  13. Ask for references.