Minnesota Attorney General Lori Swanson has filed a lawsuit against Meredian Financial Corporation, a California-based mortgage lender and broker that charged Minnesota homeowners thousands of dollars to refinance their mortgages, but failed to deliver the promised services. Meredian contacted Minnesota homeowners and pretended to be their current mortgage company in order to gain their trust, then extracted thousands of dollars in fees for refinancing services that it did not deliver.
“Meredian targeted homeowners struggling in the troubled economy who were looking to get out of an adjustable rate mortgage, or lower their interest rate by refinancing,” said AG Swanson. “The company masqueraded as the homeowner’s current lender and convinced them to pay thousands of dollars in fees, but left homeowners with the short end of the stick.”
The suit alleges that Meredian first baited homeowners by passing itself off as their current mortgage lender, then made numerous false representations including low fixed rates, no out-of-pocket expenses, no appraisal requirement, and that the refinance had already been approved by an underwriter, in order to get them to pay upfront “rate-lock” fees. Meredian falsely represented that these fees—typically between $1,000 and $4,000—would be refunded at the closing, which it claimed would occur within 30-45 days. Once Meredian obtained the upfront fees from a given homeowner, it would cease work on the loan file, creating excuses such as asking for documents the homeowner had already provided or that were irrelevant to the refinance, or changing the terms of the refinance with higher rates and fees. Homeowners who attempted to cancel and requested that Meredian return their upfront fees were denied refunds.