Freddie Mac Halts Dealmaking for Meridian Capital, Launches Probe
By Mark Hallum November 7, 2023 2:42 pm
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Freddie Mac (FMCC) has put Meridian Capital Group under the microscope after a loan brokered on behalf of the government-sponsored entity was called into question.
Meridian has been barred from placing deals through lenders that are Freddie Mac seller-servicers while the investigation is underway, and the Ralph Herzka-owned firm has placed one broker on leave while it cooperates with the probe, The Real Deal first reported.
A source familiar with the suspension said that Freddie Mac raised questions about certain loan information in originations tied to the broker in question. Freddie Mac notified seller-servicers that it would be suspending certain business involving Meridian late last week as a full investigation was launched.
Full details of the investigation were not immediately clear, but as one of the biggest commercial mortgage brokerages in the United States with a robust portfolio of agency multifamily originations, there could be far-reaching impacts for the industry. After all, in 2022, Meridian took the crown for the most Freddie Mac and Fannie Mae (FNMA) originations through lenders for the seventh year running.
One source opined that, depending on the findings, buybacks could occur if it’s found that Freddie Mac loans were originated outside of the agency’s underwriting standards.
Another source, speaking more generally, said that tweaking or manipulating loan information in order to conform to underwriting criteria — agency or otherwise — often goes unnoticed in good markets, but comes to the fore at times of dislocation. They added that any sign of bad information in originations could spark a full investigation of a firm.
“Meridian is committed to compliance with industry standards and best practices,” a spokesperson for Meridian said in a statement. “We value the long-standing, trusted relationships we have built with our customers, agency lenders and other partners, and continue to work with our clients to meet their real-estate brokerage needs.”
Freddie Mac did not immediately respond to a request for comment.
Meridian being placed on hold comes as the firm has looked to streamline its operations in markets like Queens where it hired investment sales veteran Thomas Donovan to bring in more deals.
The new hire came on the heels of an announcement in April that Meridian would be laying off 5 percent of its staff due to economic conditions, mostly from the debt and investment sales team and its head of public relations at the time.
Mark Hallum can be reached at mhallum@commercialobserver.com.
