Almost a year after being sidelined by Freddie Mac, Ralph Herzka’s Meridian Capital Group is ready to get going on deals with the agency again, but with a caveat.
The government-sponsored entity will start accepting Meridian-brokered loan deals at the start of next year, the Promote reported, based on an internal email.
The news was circulated on Tuesday by the firm’s chief executive officer, Brian Brooks, who was tasked with building compliance and risk infrastructure when the former Fannie Mae general counsel joined the firm earlier this year.
About a year ago, because of a suspicious deal, Freddie Mac suspended Meridian from brokering deals on behalf of Freddie Mac lenders. Fannie Mae sidelined Meridian in March, a suspension that appears to remain in place.
The blacklist designation was a critical blow to Meridian, one of the nation’s largest commercial mortgage brokerages, as Freddie Mac and Fannie Mae are major buyers of multifamily loans. Meridian has arranged thousands of loans for small building owners who need to finance their properties, but many lenders won’t issue loans that cannot be sold to Fannie or Freddie.
While the end of its suspension can only be considered a positive development for Meridian, the firm will not be going back to normal just yet. Freddie Mac is creating a “special process” for Meridian that might give some lenders pause.
Lenders on Meridian-brokered Freddie Mac deals will be required to repurchase a loan if a borrower defaults within a year of the loan’s origination. A lender could also be required to repurchase the loan at any time if wrongdoing is discovered.
Additionally, lenders will need to vouch that there’s no fraud involved in any Meridian-brokered deal and there will be other assorted requirements, such as stricter lease audits and a mandate for lenders and borrowers on Meridian deals to meet in-person.
Even with Freddie Mac’s blacklist, Herzka kept things moving. Meridian transacted $4 billion of new business with 99 lenders in 28 states in the first quarter of this year, Herzka said during an industry conference in the spring.
“You are not defined by one event,” Herzka said at the time.“We’re going to learn lessons, we are going to be better and stronger.”
It remains to be seen how Freddie Mac’s “special process” will affect Meridian as the firm seeks to return to the government enterprise’s good graces.
Read more
Commercial
New York
Meridian’s Ralph Herzka gives rallying call, despite struggles
Commercial
New York
Meridian Capital under investigation by Freddie Mac
Commercial
New York
Meridian Capital’s Yoni Goodman leaving as firm deals with scandal