Meridian Capital Group has let go of brokers in its New Jersey office as the brokerage goes through a leadership shakeup and a blacklist from Freddie Mac and Fannie Mae.
The commercial brokerage laid off a number of brokers, but the company still plans to keep some of their top producers, according to a source. Meridian’s website still lists an office in Iselin, New Jersey. Meridian declined to confirm the exact number of layoffs.
“Meridian is transforming into a leaner and more efficient company that will continue to lead the CRE and multifamily brokerage space,” the company said in a statement.
The firm is seeking to revamp its executive team after Freddie Mac and Fannie Mae halted business with the firm amid allegations that some brokers falsified financials to secure larger loans than they otherwise would have obtained.
The move comes after the company appointed a new CEO, chief risk officer and two new board members. Its long-time CEO Ralph Herzka has been moved to chairman. A few of Meridian’s top dealmakers have left the firm.
Fannie, Freddie and the Federal Housing Finance Office of the Inspector General have launched investigations into mortgage fraud throughout the country. Specifically, many of these allegations involve inflated financials in order to obtain agency loans. Freddie Mac recently updated their guidelines to increase borrower due diligence.
“Meridian is poised to become the industry standard bearer in the areas of compliance and risk management that meets the needs of Fannie Mae and Freddie Mac,” the company said in a statement.
Meridian rose to be one of the largest brokerages for mid-size landlords in New York City. A large portion of its business came financing deals with Fannie and Freddie. In the first quarter of this year, Herzka told an audience at a real estate conference in New Jersey that Meridian closed $4 billion of new business with 99 lenders.
After news broke about Meridian’s blacklist, the company hired Brian Brooks, the former acting comptroller of the currency and worked for Fannie Mae. Brooks said he is considering measures to ensure financials sent to lenders are accurate, according to the Wall Street Journal. He is also considering mandating board approval for larger deals.
“We want our brokers to be scrappy and hungry, but we will be checking,” Brooks told the Journal. “We will cut brokers who cut corners.”
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