Our company referred a commercial CMBS transaction to Nick Sheth at the Loan Depot Lending Company located in Chattanooga, TN. Nick’s agreement with referring sources is a 50% split of all fees earned, including upfront, ysp and premium. We entered into such an agreement with Nick, but were told that no premium was being paid on our transaction. As such, an upfront fee agreement was authored and executed by our client. That agreement paid Loan Depot the gross fees, and our fees would of 50% would be deducted and sent to us by Loan Depot, per the agreement Loan Depot has with its referring parties.
As we concluded our transaction with UBS, and through increased frustration that he was not being properly represented by Nick Sheth, my client contacted UBS direct. During that discussion my client inquired if any premium was being paid to the Loan Depot Lending Company. The response from UBS was a firm YES!! Nick was being paid a 2% premium. When confronted by both myself and my client, Nick denied the existence of that 2% in premium. At this point our client felt deceived and manipulated. Although he agreed to compensate Nick through a fee agreement for the completion of the loan, he did not agree to excessive fees. Clearly if premium has been honestly disclosed, our signed fee agreement would be for a lesser amount, or removed altogether.
Because our client lost all trust with Nick Sheth, he worked directly with UBS to close his loan. It was also through our client’s insistence that we be paid our companies 50% of the upfront fee agreement directly from our client and not from Nick as the fee agreement stipulated. After repeated requests Nick finally authorized that direct payment in writing. By doing so he again verified the existence of an agreement between our company and Loan Depot.
The loan funded and my client paid our company the 50% of the upfront fee agreement directly to us. Nick was not paid, as our client felt he was already being generously compensated for his efforts and that he was deceived. A day after that payment was made; both my client and I received several emails from Nick Sheth stating that Loan Depot has terminated its agreement with our company and that no commissions will be paid of any kind. Simultaneously our client was instructed to pay the entire upfront fee agreement to Loan Depot as an agreement no longer existed. Nick appeared to be unaware that we were compensated the day before, and was making an attempt to not pay our company a dime for its referral and work.
As a condition of closing the loan UBS agreed to inform my client in writing of any premiums paid to Nick Sheth, and the Loan Depot Lending Company. My client received that letter late December. It stated that UBS was paying Nick Sheth more than 280k, or 2%. Despite Nicks repeated denials of that compensation, it was paid. Per Nick’s agreement with our company part of that premium belongs to our company. Repeated demands for our compensation remain unsatisfied. Nicks argument, I forfeited any backend earnings because I took my clients side…….
Unfortunately if our client didn’t reach the point of frustration that prompted the decision to call Jared at UBS direct, we would have never known of the 2% premium. This is most likely the case with most or all of the transactions referred to Nick Sheth and the Loan Depot.
We are proceeding with civil/legal action as this behavior is intolerable.
To those that are contemplating a business relationship with Nick, I caution you as he does not conduct himself ethically or morally. Look elsewhere for a partner that will be honest with you.
To those that are currently working with Nick. If you are being told that there is no premium being paid on your deal, especially if it is being funded by UBS, you need to verify it with the funding bank. Have your customer call them direct and ask if premium is being paid on their transaction. You may be surprised by their answer.
To those that have referred and closed a transaction with Nick in the last 6 months, premium may have been paid to Nick, but not disclosed to you. This would put him in breach of the agreement that you signed with him and his company. Have your client contact UBS, ( I have the contact info) and inquire if premium was paid on their specific transaction. Nick may have made up to 2% as is the case on our referred deal. You may have additional compensation due you.
Nick Sheth was not honest with us regarding the earning of premium. Clearly it was his plan from the beginning to not honor agreed upon payment terms. Understand, that the purpose of this post is to caution others in their dealings with Nick. If such a post existed previously I would not have proceeded with Nick Sheth, and would have saved myself a major headache!
If you feel that you may be victim of insincere conduct by Nick Sheth, I can be contacted at email@example.com.