An InterCapital Funding Insight — The Bank for the Unbankable

In today’s fast-moving real estate market, investor-focused lenders like InterCapital Funding are seeing increased activity — and with opportunity comes responsibility. Recent alerts from Fannie Mae’s Financial Crimes Investigation (FCI) team highlight a growing concern across the lending industry: fraudulent refinance schemes involving LLCs, inflated appraisals, and unrecorded hard money loans.

As a trusted private lender, InterCapital Funding believes in educating our investors and borrowers about these patterns so you can protect your portfolio, your reputation, and your future access to capital.

What’s Happening

Fannie Mae’s investigation uncovered schemes involving multiple LLCs acquiring small multifamily investment properties — typically two- to four-unit buildings — and transferring deeds between related entities.

After the transfer, individuals associated with the LLCs applied for limited cash-out refinances, despite not appearing on the property title. The appraised values were often inflated, allowing the applicants to take out far more money than the properties were truly worth.

In some cases, “hard money loans” appeared on title commitments but were never officially recorded with the county. This manipulation falsely presented the transactions as limited cash-out refinances instead of full cash-out refinances — bypassing standard underwriting scrutiny.

Red Flags for Investors and Lenders

As an investor or partner, keep an eye out for these indicators:

• Deed transfers recorded within 60–180 days before a refinance.
• LLCs acting as both buyer and seller on property transfers.
• Inflated valuations or unrealistic appreciation within short time frames.
• Unverified liens or unrecorded hard money loans appearing on title reports.
• Inconsistent or back-dated documentation.
• Borrowers or entities linked to the same individuals across multiple properties.

At InterCapital Funding, we conduct thorough due diligence on both the borrower and the property to detect and prevent these red flags early.

How InterCapital Funding Protects You

Integrity is non-negotiable. Our underwriting and compliance process includes:

• Verification of all recorded liens and deeds through trusted title partners.
• Independent appraisal reviews to confirm true market value.
• Entity verification — ensuring LLCs are legitimate, active, and properly authorized.
• Direct borrower communication — we work with you, not through layers of brokers, to maintain transparency.
• Zero-tolerance policy for fraudulent or misrepresented information.

If a deal doesn’t make sense, we don’t fund it.

What Investors Can Do

Protect yourself by taking these steps:

• Work only with verified lenders that disclose terms clearly.
• Keep entity and property documentation accurate and updated.
• Avoid deed transfers or equity moves that appear designed to “reset” ownership.
• Ask your lender how they verify appraisals and liens.
• When in doubt, ask questions before you close.

Our Commitment

At InterCapital Funding, we’re committed to building strong, transparent partnerships with serious investors. Fraud prevention isn’t just compliance — it’s good business. It protects your capital, your reputation, and the credibility of every investor who’s working to rebuild and revitalize communities like Detroit and beyond.

If you have questions about loan compliance, underwriting integrity, or how we verify your deal’s security, reach out to our team.

• 📞 800-963-0066 | 🌐 www.icfunding.org/
• InterCapital Funding — The Bank for the Unbankable