ST. PAUL, Minn. (Legal Newsline) - Minnesota Attorney General Lori Swanson filed a lawsuit on Monday against a California-based mortgage lender and broker that allegedly charged thousands of dollars to Minnesota homeowners to refinance their mortgages.
Meredian Financial Corporation allegedly contacted Minnesota homeowners pretending to be their current mortgage company to gain their trust. The company then charged thousands of dollars in fees for refinancing services that it failed to deliver.
"Meredian targeted homeowners struggling in the troubled economy who were looking to get out of an adjustable rate mortgage, or lower their interest rate by refinancing," Swanson said. "The company masqueraded as the homeowner's current lender and convinced them to pay thousands of dollars in fees, but left homeowners with the short end of the stick."
Swanson's lawsuit alleges that Meredian made numerous false representations to homeowners while pretending to be their current mortgage lenders, including promising low fixed rates, no out-of-pocket expenses, no appraisal requirement and informing homeowners that the refinance was already approved by an underwriter. The promises were made to lure homeowners into paying up-front "rate-lock" fees, she says.
The "rate-lock" fees of between $1,000 and $4,000, Meredian allegedly told consumers, would be refunded at closing, which the company said would occur within 30 to 45 days.
Once the fees were collected, Swanson alleges, Meredian would cease working on the loan file and create excuses, including asking for documents that had previously been provided by the homeowners or that were irrelevant to the refinance, or would change the terms of the refinance with higher rates and fees.
Customers who attempted to cancel their refinance and who requested their up-front fees back were allegedly denied refunds, she says.