Meridian Capital under investigation by Freddie Mac

The powerful multifamily lending agency Freddie Mac is investigating Ralph Herzka’s Meridian Capital Group over a deal the brokerage did for the company, sources told The Real Deal.

While the probe is ongoing, Meridian is barred from brokering deals on behalf of Freddie Mac lenders. Herzka’s firm has placed a broker on leave and is working with Freddie on its inquiry, according to a source familiar with the investigation.

The blacklist designation is a big blow to Herzka’s business. Meridian Capital is one of the country’s largest commercial mortgage brokerages, and Freddie Mac is a huge source of loans for the multifamily industry.

An irony of the probe, which concerns loan information, is that Meridian is an investor in a  multifamily lending platform headed by former Freddie Mac CEO David Brickman.

A spokesperson for Meridian Capital Group declined to comment on the Freddie Mac investigation, but said in a statement, “Meridian is committed to compliance with industry standards and best practices. 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.”

A spokesperson for Freddie Mac declined to comment.

Freddie Mac has increased its efforts to weed out mortgage fraud. The agency late last week informed a group of lenders that Meridian had been placed on a “temporary pause” from arranging Freddie loans, according to the familiar source.

People familiar with the so-called blacklist said companies are placed on it when an investigation is started. They can be removed if cleared of wrongdoing.

Meridian’s strength is in arranging thousands of loans for small building owners who need to finance their properties. Herzka has a reputation as a hard-driving manager. His firm’s motto is ​​“Eat. Sleep. Close. Repeat.”

Meridian had previously owned a stake in Freddie lender Beech Street Capital, one of the country’s largest originators of agency loans. But that relationship ended when Beech Street was purchased by Capital One in 2013, creating a years-long lul in Herzka’s investments in the lending side of the business.

In 2021, Meridian got back in when it teamed up with investment manager Barings to launch the Brickman-led originator NewPoint Real Estate Capital.

A spokesperson for NewPoint noted the company is a separate entity from Herzka’s brokerage and that NewPoint’s Freddie Mac lending status remains unchanged.