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Govt & One of Nation's Largest Mortgage Lenders Sue Each Other

blog.credit.com | April 29, 2015

By Christine DiGangi

The U.S. government filed a lawsuit against Quicken Loans, one of the nation’s largest mortgage lenders, for allegedly improperly originating and underwriting Federal Housing Administration (FHA) home loans, the Department of Justice announced April 23.

The Detroit-based lender closed $140 billion in mortgages from 2013 through 2014 and is the nation’s largest FHA mortgage lender, according to the company’s website. It is also the nation’s largest non-bank lender, in terms of mortgage origination.

The FHA, part of the U.S. Department of Housing and Urban Development (HUD), insures home loans with lower down payments, lower closing costs and lower applicant credit scores than with conventional mortgages, allowing more people (particularly first-time homeowners) the opportunity to buy a house. If the borrower defaults on the loan, the lender may make a claim to FHA insurance to cover the losses on the loan, and during the onslaught of loan defaults during the mortgage crisis a few years ago, that insurance fund was stretched thin.

The government claims that from September 2007 to December 2011, Quicken jeopardized the FHA insurance program by submitting claims for “hundreds of improperly underwritten FHA-insured loans.” The lawsuit alleges the company created a culture where employees were encouraged to disregard FHA rules and falsify proof of compliance with underwriting requirements in order to cash in on FHA mortgage insurance.

Quicken actually filed a lawsuit against the Department of Justice first, saying that “the DOJ demanded Quicken Loans make public admissions that were blatantly false, as well as pay an inexplicable penalty or face legal action,” according to the lender’s April 17 announcement of the lawsuit. In a statement released in response to the DOJ’s lawsuit a week later, Quicken said the complaint is “riddled with inaccurate and twisted conclusions,” based on a small portion of emails the lender turned over to the department.

“[T]he DOJ appears to be basing their entire case on a handful of out-of-context email conversations skimmed from the communication between Quicken Loans employees. These conversations relate to a miniscule [sic] number of loans out of the nearly 250,000 FHA mortgages the company has closed over the past seven years,” Quicken’s statement says.

 

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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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