sounds as though you are dealing w/ a middle man

definitely sounds like a middle man, I would be very careful

Yeah, they say they are the lenders and not a middle man but want an upfront fee to start everything

I'm just not sure since I have not done anything with private lenders before. I don't know what's normal and what isn't

a reputable lender private or otherwise pays people on the back end. You may put money in escrow for the loan but no one gets paid up front