Despite plenty of bad press, the vast majority of hard money lenders are legitimate companies that do things by the book. But just as in any industry, hard money has its black sheep. There are scammers who think nothing of robbing people blind by posing as legitimate lenders and then taking the money and running.
How can you know you are dealing with a scam artist? You cannot ever be 100% sure, but certain signs can tip you off. Four of those signs are discussed below. They are offered by Actium Partners, a Salt Lake City hard money firm with years of experience and a solid industry reputation.
1. Lack of State Registration
Though state regulations governing hard money differ, nearly every state requires lender registration at minimum. Some require licensing based on meeting specific conditions. A hard money lender lacking registration, or a state license is automatically suspect.