State officials are warning Ohio residents to use caution with newspaper advertisements that promote the availability of loans but do not identify the name of the company or its mortgage broker registration number.

Ads recently have appeared in the Lorain Morning Journal and other papers promoting the availability of first and second mortgage loans, car loans and debt consolidation for persons with “bad credit and bankruptcy,” the Ohio Department of Commerce’s Division of Financial Institutions said this week.

The ads provide only a toll-free telephone number, and promise “no upfront fees and fast results.”

According to the Ohio agency, the toll-free number tracks back to Canada.

In a typical advance-fee loan scam, phony businesses place classified ads to lure people who are having difficulty finding a loan due to past credit problems. The ads typically urge the consumer to contact the business at a toll-free long distance telephone number in another state or in Canada.

After soliciting financial information from the caller, they claim that they can find a private lender to finance a loan. However, before the loan can be processed, they say that the consumer needs to make a down payment or purchase special mortgage insurance. The consumer is then instructed to send between $400 and $2,000 to cover those costs by sending a money order out of state or to Canada.

In connection with the Ohio ad, a consumer was instructed to send $1,245.52 to purchase an insurance policy to secure the proposed mortgage loan.

“When a mortgage broker demands money (except for small amounts for credit or appraisal reports) before providing services, this should raise an immediate red flag for every borrower,” said F. Scott O’Donnell, Ohio’s Superintendent of Financial Institutions.

He added, “Legitimate brokers get paid at the time of the loan closing. Do not send money to a mortgage broker in advance of receiving a loan. In all likelihood, it will be the last time you see that money or hear from the so-called mortgage broker.”

Ohio law requires mortgage brokers operating in the state to be registered through the Division of Financial Institutions and to include their registration number in any advertisement.

O’Donnell said Ohio residents should first check with the Division to learn if a mortgage broker is registered in the state. They can do this by conducting a search of mortgage broker’s on the agency’s Web site at, or by calling (866) 278-0003.


Send tips or a Letter to the Editor to or call (510) 658-9252, ext. 133.

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