Beware of predatory lender

Brokers are advised to beware of a lender claiming to be based in the Greater Toronto Area, who’s alleged to swindle desperate borrowers with badly damaged credit.

On its website, Creditstone Lending Service bills itself a “nation-wide [sic] financial service provider” that accommodates private loans, including on mortgages. However, a quick phone call to the Financial Services Commission of Ontario reveals Creditstone Lending Service is not registered. Moreover, the address listed on Creditstone’s website—3344 Mainway Burlington, ON—has belonged to the Ontario Trial Lawyers Association for at least the past two years.

Stephane Prevost, principal broker at Opulent Mortgages in Ottawa, contacted MortgageBrokerNews.ca after his client’s experience with a Creditstone Lending Service representative named Steven Price. Prevost’s client—whose identity MortgageBrokerNews.ca has agreed not to publish—was due a $10,000 loan from Creditstone, but she was first told to pay an upfront insurance fee of $890 before any loan documents were sent.

“If there was a fee to be charged, legally you can’t do that,” said Prevost. “For any loan agreement in Ontario, it’s fraudulent to ask for an advanced fee, even if it’s an insurance fee.”

After paying the fee, the loan did not arrive, and two days later Creditstone Lending Service asked for a second fee of $990 in order for the loan to be disbursed.

Contacted by telephone, Price first said he does not know who Prevost’s client is, even though MortgageBrokerNews.ca is in possession of a promissory note confirming the two are familiar. Price immediately thereafter called Prevost’s client and asked if she’d consented to a journalist calling him.

Prevost notes several red flags were missed, one of which was that no inquiries about his client were made to TransUnion nor to Equifax.

“[Creditstone] didn’t even ask for income confirmation,” he said. “They just asked for money. It’s not clear that it’s a promissory note, either—you have to read the details.”

The promissory note is also very poorly written.

“When I reviewed the commitment, the numbers didn’t line up and I was concerned about the APR, which was valid but the payment was off by a few pennies,” said Prevost. “For a financial institution, you’re not supposed to be off by a few pennies. The way the promissory note was written, I think a 13-year-old would have done a better job.”

Arguably the biggest red flag of all is the fact that the insurance fee paid to Creditstone Lending Service was e-transferred directly from Prevost’s client to Steven Price—which MortgageBrokerNews.ca has verified—rather than to the Creditstone itself. Originally told Creditstone would be loaning the money, Prevost’s client was subsequently told an investor would be lending her the money.

Prevost’s client has asked Creditstone for a refund but was told it can take up to three months for the reimbursement to be paid.

“The letter was deplorable and didn’t even look valid,” said Prevost. “It’s your typical story of a person with bad credit hoping to have a promising solution, but there’s no lending involved, and that’s the worst part. There’s no loan in place and at first they were saying it was their own money, and then they started saying it was an individual’s money they’d be loaning. Their website says they do mortgages, but they’re not licensed.”