Taking out a hard money mortgage can be a useful short-term solution to some struggling buyers. However, if you’re ever on the other side of the equation (i.e. asked to be the lender instead of the borrower), use caution.

Although there are many legitimate opportunities to invest, there are also a number of ways to get swindled.

Just this week, a Utah man was arrested for allegedly operating a “Ponzi-like” scheme that drew in investors under the guise of making high-interest hard money loans.

KUTV 2 explains:

“The SEC says Smart put some money into risky real estate and some went to pay other investors. It says the rest went into his pocket or his business…

In court documents, the SEC refers to this part of Smart’s alleged scheme as phase three. The agency says Smart recruited investors to his “hard-money” lending business, promising as much as 18% a year.”

Before dealing with any hard money lending operation, consult a qualified financial adviser and an attorney.

See Also:

Hard Money Mortgage Guide

Answers to Common Hard Money Mortgage Questions

Tags | creative financing, hard money, Hard Money Loans