Meredian Financial Corporation, a California-based mortgage lender and broker, is the subject of a lawsuit filed in Minnesota, which alleges that the company 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.
The lawsuit 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 up-front “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 up-front 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 up-front fees were denied refunds.
The lawsuit was filed by the Minnesota Attorney General Lori Swanson.
AG Swanson Warns Homeowners to Beware of Refinancing Scams. Attorney General Swanson also issued an alert entitled Beware of Refinancing Scams, warning homeowners about predatory mortgage refinancing. The Alert provides tips such as:
-Research the company. Don’t believe telemarketer claims about the legitimacy of a given company. Research the company on your own. If a caller claims to be associated with your current lender or claims to have personal credit information that only your bank would have, call your lender at the phone number on your monthly bill to verify it.
-Get it in writing. Don’t believe verbal representations about low rates or favorable terms. Get everything in writing before you agree to refinance, including a good faith estimate, which outlines the fees associated with the refinance, and truth-in-lending statement, which spells out the APR (annual percentage rate). Don’t agree to sign anything contrary to what you were promised.
-Shop around for the best loan. Contact multiple lenders to compare rates and terms. Review offers closely, and watch for excessive fees. Since refinancing fees can be rolled into a loan, they are easy to disguise, and unscrupulous lenders may try to represent a certain rate or no “out-of-pocket” expenses, while charging excessive fees financed through the loan.
-Don’t be pressured into acting quickly. Don’t feel pressured into locking in right away, especially if you are unfamiliar with the company. It is tempting to lock in immediately when offered certain rates or terms, but be wary of any entity that pressures you into acting too quickly. Slow down, getting everything in writing, and compare terms and rates.
Homeowners may file a complaint by contacting the Minnesota Attorney General’s Office at 1-800-657-3787 or 651-296-3353. Homeowners may also download a Complaint Form from the Attorney General’s website at www.ag.state.mn.us and mail the completed form to the Attorney General’s Office at: 1400 Bremer Tower, 445 Minnesota Street, St. Paul, MN 55101-2131.
“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 Attorney General 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.”