Kennedy Funding Ripoff Report: A Comprehensive Analysis

Kennedy Funding is a private direct lender company that offers short-term commercial loans; it has recently attracted attention to its financing strategies. However, the company has also received criticism, for instance some people and business entities have complained that they did not receive good services from the company. In this article the author investigates the accusations against Kennedy Funding, the background, the main concerns and the consequences of this case for borrowers and the lending market.

Background on Kennedy Funding

Kennedy Funding was established in 1987 in New Jersey and is a private commercial mortgage REIT. It mainly engages in providing commercial real estate loans and focuses on high-risk cases where normal financial solutions are not feasible. The company has financed well over $3 billion in loans across a number of industries, with land acquisition, construction and refinancing being the most common.

The specialization of Kennedy Funding is in the fact that it does not hesitate to offer loans to some borrowers that may not meet the requirements of traditional bank loans. This ranges from people with bad credit, half-baked projects, or who deal in non-traditional property. This is a different approach from most of the company’s competitors as it evaluates the possible value of the collateral and not the credit worthiness of the borrower and this makes the firm provide financing solutions where other firms would hesitate.

The Ripoff Report Allegations

In the context of lending the term “ripoff” is more about practices that the customers consider as unjust, misleading or unreasonably malicious. Several complaints have been reported against Kennedy Funding and most of these complaints are posted on the Internet, consumer advocacy websites such as Rip-off Report. These allegations primarily revolve around the following issues:These allegations primarily revolve around the following issues:

High fees and interest rates are the second major drawback that makes it almost impossible for the borrowers to get out of the vicious cycle of debts.

Perhaps one of the most frequently cited grievances against Kennedy Funding is the exorbitant charges and rates of interest on their loans. Borrowers have been forced to pay very high upfront fees that range between tens of thousand of dollars before they are given any money. Also, the interest rates of the loans are considerably higher than those provided by the conventional banks, which causes some financial pressure to the borrowers.

Lack of Transparency

Some borrowers have claimed that Kennedy Funding has been less than forthcoming regarding the details of the loans that they took from this company. Some have accused the companies of failing to explain the total cost of the credit facilities, including all the incidental charges, before entering into the contract. Such lack of clarity has fostered confusion and economic constrains for some borrowers who said that they were duped into borrowing from Kennedy Funding.

Loan Denial After Initial Charges

Another grave complaint which some borrowers have lodged against payday loan companies is the fact that some of these companies refuse to release the loans even after the borrower has deposited a good amount of money as a fee for the loan. Most of the customers who complained of have been turned down for loans after paying these fees, and most of them said that the reasons given were either unfair or not well explained. Occasionally, the borrowers said that Kennedy Funding never refunded the fees hence they were left with no loan and no refund for the fees paid.

Aggressive Collection Practices

There are also some complains as to the collection practices of Kennedy Funding. However, where borrowers have defaulted on their loans, there has been reported cases of high pressure, bullying through constant calling, threats of law suits and frequent recourse to foreclosure of the property offered as security. These practices have worsened the stress levels and the financial problems that some of Kennedy Funding’s customers have.

Kennedy Funding’s Response

In regard to these allegations, Kennedy Funding has defended its activities as legal in the lending market and helpful to borrowers who may have difficulty getting credit. In its defense the company has argued that its fees and interest rates are higher due to nature of the loans it provides.

Arguing for High Fees and Interest Rates

Kennedy Funding claims that the high fees and interest rates are reasonable because of the nature of the loans that it provides. Due to the fact that the company targets borrowers with a high risk and non-conventional assets, the exposure to financial risk is much higher than the exposure of conventional lenders. For this reason, the company says that it needs to charge higher fees and higher rate of interest in order to balance the risk and remain profitable.

Addressing Transparency Issues

As for the transparency issue, Kennedy Funding states that it shares all the necessary information with the borrowers before they agree to take a loan. The company states that all fees and costs are disclosed and borrowers enter into the contracts with their consent on the fees and charges. Kennedy Funding also avails itself to the defense that it complies with all the laws and regulations that pertain to loan disclosure.

Loan Denial and Refund Polices

With regard to the issue of upfront fees charged before loan application, only to be followed by loan refusal, Kennedy Funding has defended its position on the grounds that the upfront fees are for purposes of undertaking due diligence, including property appraisals, legal opinions, among others. The company’s view is that these costs are inevitable whether the loan is granted or not. Nonetheless, Kennedy Funding has been accused of lacking policy to refund borrowers in cases where loan application is rejected leaving several borrowers frustrated.

Collection Practices

In an effort to defend itself against accusations of using aggressive collection tactics, Kennedy Funding claims to have the right to collection for its dues especially where the borrowers have defaulted in their obligations. It insists that its collection activities are reasonable and are used to mitigate risks and recover costs from customers.

The Broader Implications

The accusations against Kennedy Funding reveal more about the problems that are inherent to the sphere of private lending. As it has been said, high-risk lending is characterized by higher costs and increased risks for both the lending party as well as for the receiving party. However, the accusations in unfair practices and veil of secrecy with regard to the loan terms put into question the ethical status of some private creditors.

To borrowers, these reports highlight the need to fully read and understand any term and condition of any agreement entered into with the lenders, especially those with non conventional lenders. One must always be abreast with all possible expenses, and it is prudent to consult a lawyer or a financial expert in case of any doubt.

Conclusion

Reading the ripoff reports and complaints in regard to Kennedy Funding one is able to understand the disadvantages and possible problems connected with high-risk lending operations. Although the company has justified its actions as being having strategic relevance to its operations, there may be cases of dissatisfaction among some borrowers as to indicate that maybe there is need to improve on how they communicate with customers and attend to their complaints. Potential borrowers must always be cautious, and be very selective with the lenders they chose to deal with, especially those in the subprime category.