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US Sues Quicken Loans for Violating Rules on FHA Loans: Report

By    |   Friday, 24 April 2015 01:24 PM

The U.S. Justice Department sued Quicken Loans this week, accusing the lender of filing false claims on government-insured mortgages.

The complaint, filed in the U.S. District Court for the District of Columbia on Thursday, said the company improperly originated and underwrote mortgages insured by the Federal Housing Administration, Reuters reported.

The lawsuit comes after Quicken Loans on Friday sued the Justice Department and the Department of Housing and Urban Development, which oversees the FHA. The company, one of the largest U.S. mortgage lenders, said it was pressured in the case to "make public admissions that were blatantly false, as well as pay an inexplicable penalty or face legal action."

The Justice Department's complaint says Quicken Loans submitted or caused the submission of claims for hundreds of improperly underwritten FHA-insured loans from September 2007 to December 2011.

Quicken Loans said in a written statement that the government was on a "witch-hunt" and that the complaint was "riddled" with inaccurate conclusions.

"The irrational and baseless claims by this powerful federal agency will be exposed in federal court," the company said.

The government said Quicken Loans' senior executives knew about the misconduct, which included asking appraisers to inflate home values that were initially too low to meet the underwriting requirements for the company to approve a loan, court documents show.

As a result, the Department for Housing and Urban Development paid millions of dollars of insurance claims on improperly underwritten loans.

Quicken Loans concealed its deficient underwriting practices and failed to report a single underwriting deficiency to the government agency, according to the complaint.

The discord between the Justice Department and Quicken Loans is in contrast to settlements the government reached with other financial firms over the underwriting of sub-standard mortgage loans.

Several lenders, including JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Deutsche Bank AG and MetLife Inc have resolved federal lawsuits over FHA-insured loans.

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The U.S. Justice Department sued Quicken Loans this week, accusing the lender of filing false claims on government-insured mortgages.
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Friday, 24 April 2015 01:24 PM
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