YouTube video posted by Private Money Utah on September 1, 2021
This short video explains a real estate scam that is gaining frequency and gaining steam. It is called the “Down payment scam.”
Do not assume that anyone you know understands how real estate works or knows about this scam. Here is the story, as told by private money lender Corey Dutton:
“A couple approached me for a bridge loan to buy a $3 million dollar house. They had already talked to a hard money lender that they found online. They had a legitimate-looking website. They had been dealing with them, everything was going great, and then the lender asked the couple to wire him their down payment on the $3 million dollar purchase of 20 percent. That’s $600,000. The couple, unassuming, wired this lender $600,000. What happened? POOF! $600,000 is gone. It’s a fake lender.
The lesson learned that you need to share with everybody you know is this: Like this couple, a lot of people that you know probably don’t know that when you buy a property that you never, ever, under any circumstances, wire your down payment to your lender. You wire your down payment to your appointed title company, escrow company, or – in some states – a real estate attorney. Unfortunately, this couple did not understand enough about how real estate works to know this. They went online, found some private money lender that looked like it had a legitimate website. When the lender told them to wire him the down payment, they did it and lost $600,000.
This is the second time I’ve heard of this happening in the last six months. So don’t assume that your brother-in-law, your best friend, or your colleagues know that when they purchase a property that they always wire their money to a title or escrow company. Share this video with them and help stop the spread of this fraud.”