All you need to qualify, this lender advertises, is “a pulse and a legal ability to sign.” Why? Because he doesn’t want his money back; he wants your house. And he’ll tell you up front that he’s ready, willing, and able to take it[1]. So why would people borrow money from Emiel Kandi, who has made “hundreds of thousands of dollars” in a shady corner of the lending industry, taking control of collateral property on loans that are barely delinquent and flipping them as quickly as possible to turn a profit? “I’m a wolf,” he admits, but sometimes people are desperate.
Kandi is a hard money lender – an entirely respectable trade and one on which real estate investors have relied for years – but he’s out there unabashedly giving the entire industry a really lousy reputation. He proudly explains how he skirted mortgage requirements and disclosures by writing up the loans he makes as “commercial,” which kept him free of many regulations imposed on other types of lending transactions. A lawyer who has sued Kandi – and won, although the payoff does not appear to be forthcoming – describes him as “in the business of taking people’s property” and exploiting vulnerable people. Could be, says, Kandi, but they were the ones who signed.
Kandi argues that he has done nothing wrong in his hard money business, making it extremely clear that he will take borrowers’ property and even that it is his goal to do so. While some of the borrowers are now claiming that they did not understand what they were signing, Kandi claims that they are just “crying foul” because they cannot pay the money back. Things get hazy as “good, hardworking people” then claim that Kandi is refusing cash payments or not recording them, and the aggressive, somewhat arrogant and dislikable lender is equally adamant that the borrowers simply didn’t have the funds. Pile on top of that the issue that a number of Kandi’s “customers” won’t talk about their dealings with him for fear of “repercussions,” and you’ve got one big, mysterious, nasty mess on your hands no matter who is ultimately at fault.
For now, however, Kandi is in the clear. What he is doing is not currently illegal, and the people who owe him are losing their lawsuits in a lot of cases.
Do you think that this type of lending is appropriate? Are people like Emiel Kandi part of the reason real estate investors get such a bad rap?
Thank you for reading The Bryan Ellis Real Estate Letter! Your comments and questions are welcomed below.
[1] http://seattletimes.nwsource.com/html/localnews/2013427831_hardmoney14.html
This is but one way a hard money lender can do things “legally” and never suffer the consequences. Another lender I know of out of FL who offers a “perfect mortgage” up to 80%, will issue quick terms sheets and look totally legit, then come back at you for “due-diligence” lender fees for which the value never seems to come in at the required amount, then require additional “due-diligence” fees for ANOTHER “hedge-fund/middle east” source….
and the cycle repeats until you are in for thousands of dollars, never quite getting the required value or a loan.
Totally legal….totally a RIP-OFF! (But at least you don’t lose your house to him.)
Although it is impossible to determine what representations are being made in Mr. Kandi’s business, are you saying people who cannot afford their homes any longer and are delinquent on their homes should not be approached until they are 90 days delinquent and in foreclosure? Granted, there are options such as loan mod’s to consider, but I find the majority of people simply can’t afford the home and just want a way out of their home and don’t want to deal with the stress anymore. We flip properties, but do fully fund and close with the bank. We don’t take on clients if their bank will not give a full release to the old homeowner. We fully disclose we intent to re-sell the property immediately and have found no problems and no lawsuits when you are up front and honest. Some people want to know “what’s in it for them” on the back-end. Those types of homeowners, we walk away from, and in reality is the most common illegal factor I see people trying to employ. So, obviously this guy is rubbing some people the wrong way and possibly taking advantage of them, but the private money world for R.E. is busy right now and the short-sales and short-term deals are abundant and needed. S.K.