Be wary of cash-seeking loan arrangers

To hear Ryan Nelsen tell it, he let desperation get in the way of his good judgment.

"I really wanted to believe it because I knew what it was going to do for us," he said with a sigh.

Nelsen tried for months to qualify for a home loan. He wanted to move his fiancee and their two young boys out of their rented mobile home in Land O' Lakes and into a home of their own. He kept getting rejected because he has bad credit.

Then, out of the blue, a company called E-Z Loans contacted Nelsen. The lender told him he was preapproved for a $70,000 loan, and Nelsen didn't even have to pass a credit check.

"They seemed completely legitimate," Nelson said. "They had answers and FDIC regulations, just made me completely feel at ease."

The company gave Nelsen an address in Monroe, La. Nelsen said all he had to do to get the money was wire some cash through Western Union to pay to insure the loan.

That's when the trouble started.

"I was a day late sending it out, so my loan went under re-review," Nelsen explained. "It was determined I needed to put a little more funds down. This happened a couple more times, basically to where I wasn't going to get the loan unless I had the full 10 percent down."

Nelsen wired E-Z Loans three more times, to the tune of more than $7,000.

"I know it sounds stupid now, even the way I'm explaining it," he said, shaking his head. "But these guys were so good. Any question I had, they had the answer to right away."

Nelsen was so sure he was moving into a new home, he planned a moving party. He even took his 4-year-old and 16-month-old sons over to the new place to check it out.

"I had my oldest pick out his bedroom," he said. "Brought both my kids here and let them crawl around and told them this is where we're going to live now and isn't this a much nicer house?"

Nelsen said he knew there was a problem a few days before Thanksgiving. When he called the office he thought was in Louisiana, he kept getting a message that said there were technical difficulties with the line. That's when he knew his money was gone.

Nelsen filed a report with the Pasco County Sheriff's Office and also made a complaint with the Better Business Bureau. But consumer advocates say it's almost impossible to prosecute schemes like this one.

"Should it raise a red flag to a consumer if they get a preapproval for a loan that comes unsolicited, just comes in the mail?" asked Kevin Jackson, chief investigator for the Hillsborough County Consumer Protection Agency. "Absolutely, especially if they've been declined several other times from legitimate lenders."

Jackson called Nelsen's case an "advance fee loan," where the lender asks for money up front and then disappears.

Jackson said consumers need to do their homework. It's important to check the company's background and see whether there are any complaints to criminal investigations against the lender.

He also said borrowers should never wire money. If there are small fees up front for a credit application or credit check, that's OK, but send the money using a check. That way, there's a record of the transaction.

"If they're asking for a bunch of money up front, you've got to be cautious. You shouldn't be paying them any money," he warned. "You're asking them for money. Why would they be asking you for money?"

In Nelsen's case, it may have been hard to track down information on E-Z Loans. The Florida Attorney General's Office hasn't received any complaints against the company, and searching E-Z Loans on Google yields more than 75,000 results.

Nelsen said the hardest thing about losing the money was breaking it to his son.

"I actually had to explain to him that Daddy was tricked out of his money," he said, wiping a tear from his eye.

Nelsen said he still hopes to get approved for a loan to buy a home, but he plans on being more careful next time.