Complaint Review: Metro Funding Corp. - Paramus New Jersey

I would like anyone who reads this, this is another David Hecht and has nothing to do with me

Loan Officer David Hecht NMLS 368555 or business owner of Right Choice Marketing "RCM,LLC"

David Hecht and the people at Metro are arrogant (my opinion).  They seemingly pretend to conduct due diligence after you pay an enormous due diligence fee and promise a refund if they do not offer a loan.  They will make up excuses or expenses not to fund and not to return your due diligence money.  

Dear Lender, I believe you have misinterpreted the idea behind Metro's lending procedure, so I'll try to clarify. Its "due diligence" fee covers their appraisal of the land, freezing of funds (its commitment to the project), and all the legal documentation from the Letter of Intent (LOI) all the way to the Loan Summary (closing of the deal). None of that money goes to the company's own profit, it only pays for those expenses. Furthermore, if you've already signed the LOI (thus, paid the due diligence fee) and decide against working with them before you sign the Commitment Letter (CL), they not only refund every penny of the fee, they swallow all the legal costs of the documentation. It's only AFTER you sign the CL (thus, agreeing to their terms and ACCEPTING their initial loan-offer) that the fee is non-refundable. Since you've accepted the loan offer, you cannot possibly state that they "just make a loan offer that you would never accept, therefore justify keeping your money." After the CL has been signed, they must do their part and go out to appraise the land. Also, keep in mind that hard money is a very risky business and most loan-to-value (LTV) ratios are upwards of 60%. Metro is a more conservative group and ADVERTISES it's LTV's to be 50%-65%. They will on occasion give higher LTV's if they feel the project is indeed very strong but that kind of project must clearly show a high demand in terms of the market. When you say that the property was appraised for $25m, who appraised it and what did the appraisal include? When Metro decides how much to fund a project, their LTV is based purely on the "as-is" value of the land (and structure, if there is one). If it's a construction project, they'll also consider the "as-completed" value. If there's an operating structure on the land, that's also taken into consideration. My guess is that the project wasn't as strong as you thought is was. I also think that banks financed you because many banks finance with high LTV's, regardless of background or credit info of the borrower. That's how the Subprime Mortgage Crisis started. Conventional banks tend to lend to riskier borrowers, but hard money lenders do not. I believe that's where your problem is. The project sounded good before the appraisal, but Metro probably felt that the demand wasn't high enough when they appraised it. Now before you just throw $23,500 out into the open and make it sound like a huge number, let's take that number into consideration. The due diligence fee ranges from about a quarter of a Point to just above one Point. It's not an upfront committal cost like many hard money lenders charge (usually 4-6 Points). They take those at the END of closing, so you should be happy that you didn't deal with Kennedy Funding or something (THEY should be the real rip-off). You said that they offered $3m to help fund the project, which makes the fee seem very small already. You also believe that it's worth much more ($25m!!). Looking at those figures, the $23.5k is just chump change, so I wouldn't complain about that if I were you. Honestly, your rip-off report says one of two things to me. Either you didn't know all the facts (which were all definitely presented) and you actually think you're being ripped-off; or you're just upset you didn't get the funding and decided to say something negative about the company. Either way, your report will not help people looking to avoid a rip-off. If anything, you might be scaring them away from an honest and diligent hard money lender.

First of all the property have 10 Letter of Intents from buyers that you would not accept. Second you did not use 'as is' values. The property is across from a Wal-Mart site and there is major traffic and interest. You did not intend to fund, you knew all the facts and asked your inspector to find a way out. We have the most respected MAI appraiser in the state and you say it was worthless. Land can be sold in Southern Utah, we are not in that of a depressed state. Why would Wal-Mart build here in the fall? Just be honest you like taking money. I just want others out there to know your system and to be careful.

MF Corp continues its commitment to funding loan transactions. However, we can only fund loans based on the current market as-is value of the property. The fee referenced in the post was applied towards due diligence costs, commitment to funds, underwriting, and legal costs. Unfortunately the market has taken a substantial hit in the wake of the sub-prime crisis and demand for vacant land in Utah has slowed down, therefore driving as-is prices down. As lenders we always have to focus on current as-is market conditions. The borrower believed that his property / location was not affected by the crisis and was thus left upset with the resulting evaluation. This process took two weeks and a loan offer of $3,670,000 was issued, based on the current as-is value of the property. This company is built on integrity and exceptional customer service which was provided during this transaction.