Consumer Alert: Questionable Online Lenders Demanding Upfront Fees

Authorities in California and Canada say that they have received a number of complaints about MortgageTree Lending, a company that advertises loans online. MortgageTree Lending is asking its customers to wire money to Canada to cover miscellaneous loan and finance charges, according to authorities.

MortgageTree Lending lists its headquarters and central offices as being in San Jose, California. However, the local Better Business Bureau says that no such offices exist, and a search of California's Department of Corporations turns up no records on a MortgageTree Lending of San Jose.

Zach Vander Meeden, public relations director for the San Jose BBB, says complaints against MortgageTree Lending began on September 24. The BBB has received 14 complaints in the past month, and those who've complained say that they're out a total of $20,000. Canadian authorities say they have also received several complaints about the firm.

Canadian law enforcement officials point out that advance fee loan scams are finding new life as cash-strapped people with bad credit turn to alternative lenders who advertise online. Advance fee loan firms typically request a would-be borrower to make a 10 to 20 percent deposit on the money they want to borrow.

"When every traditional lender turns you away, people click onto the Internet and are surprised how easy it is to get a loan," says Louis Robertson, corporal in charge of the criminal intelligence analysis unit for the Royal Canadian Mounted Police.

Fees: $1630 in Advance

"Now it seems really stupid to have sent them my money," says Lekiesa Willis, of Hope, Arkansas. Willis says she lost $1630 in advance fees when she was told by MortgageTree Lending that in order to borrow $5000 she would have to wire fees up front.

Willis found MortgageTree Lending in September when she typed in the questions "Where do I get a $5000 personal loan with bad credit?" into the Ask.com search engine. She followed a link in the search results and was taken to a site that prompted her to provide an e-mail address and phone number. The next day Willis says she received a phone call from MortgageTree Lending asking her to fill out a formal loan application and fax it back.

At first she was told to wire $950 as an "insurance premium" and she would get that money back. Days after Willis wired the money, a MortgageTree Lending representative asked her to wire an additional $680 in taxes and fees. She wired the money and waited, and waited.

Willis says it's been hard to get in touch with MortgageTree Lending. When she does, she is told to be patient. Last week, Willis says, a representative of Mortgage Tree Lending called to inform her that her loan had been increased to $9000, and asked her to send an additional $860. Willis refused and asked for a refund. The representative told her it would cost $309 for a refund and it would take three months to have the money mailed to her, she says.

"I feel humiliated and defeated," Willis says. "Worst of all, I still need the money."

MortgageTree Lending Responds

MortgageTree Lending representative Arnold Curry says the company has been in business for five years.

"We have not taken any money from customers," Curry says. "I have no knowledge of any customer complaints."

Curry did say that his firm is being investigated by law enforcement officials, but he declined to answer further questions.