Friday, April 01, 2011

Minnesota AG Accuses Out-Of-State Outfit Of Upfront Fee Refinance Scam; Allegedly Gained Homeowners' Trust By Masquerading As Their Current Lender

From the Office of the Minnesota Attorney General:
  • Minnesota Attorney General Lori Swanson [] 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.

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  • Meredian Lawsuit. [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.

For the Minnesota AG press release, see Attorney General Swanson Sues Mortgage Lender For Charging Thousands For Refinancing Services That Were Never Provided (Attorney General Warns Citizens About Mortgage Refinancing Schemes That Promise Appealing Refinancing Packages But Collect Fees Without Delivering Promised Services).