Promissory note buyers buy notes from borrowers who are struggling to get approved for traditional mortgages. This type of financing has become more popular during times of economic downturn, as people try to find creative ways to secure home loans with less-than-perfect credit.
Investing in promissory notes can be an attractive way to earn a high interest rate. However, if you don't do your homework, you may end up losing your investment.
Investors can be targeted by scammers who promise a high return on their investments in exchange for a small initial investment. These frauds often target elderly investors who are trying to protect their retirement savings.
The scam usually involves a fictitious company that needs capital to expand and promises investors a high rate of return on their purchase. In addition, they often tell their clients that the investment is guaranteed by insurance companies.
If you suspect you are being victimized by a fraudulent promissory note, contact your state securities regulator or the SEC to find out whether the company offering the notes is registered or exempt from registration. You may also want to check with your state insurance commissioner.
In any case, it's important to do your own due diligence on the company you are considering investing in, and to act quickly if you suspect you have been targeted by a scammer. By law, you only have a short period of time to take legal action against a crook who has bilked you out of your hard-earned cash.
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