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Quicken Loans worker charged with bank fraud by Justice Department

mlive.com | May 1, 2015

By Ian Thibodeau

DETROIT, MI - Quicken Loans took another hit just a few days after the Detroit loan giant got into the ring with the U.S. Justice Department.

The Detroit News reports that the Justice Department has charged a former Quicken contractor with conspiracy to commit bank fraud.

The DOJ accused Quicken contract worker Cynthia Slay of giving bank account information from loan applicants to an "unnamed source" who then stole $22,000 from the accounts.

Slay "no longer performs work for the company," according to Quicken spokesman John Perich.

According to The Detroit News, Slay allegedly used a Craigslist add to get people to help her drain the accounts.

The DOJ alleges that Slay went after loan applicants with at least $10,000 in their account.

This comes less than a week after the DOJ filed a lawsuit claiming "Quicken instituted and encouraged an underwriting process that led to employees disregarding FHA rules and falsely certifying compliance with underwriting requirements in order to reap the profits from FHA-insured mortgages," the Justice Department alleged in a statement announcing the lawsuit.

"The government's complaint alleges that as a result of Quicken's knowingly deficient mortgage underwriting practices, HUD has already paid millions of dollars of insurance claims on loans improperly underwritten by Quicken, and that there are many additional loans improperly underwritten by Quicken that have become at least 60 days delinquent that could result in further insurance claims on HUD."

Investigators accuse Quicken of approving that loan despite multiple overdrafts appearing in the borrower's bank statements during the application process.

"The borrower made only five payments before becoming delinquent and as a result, HUD ultimately paid an FHA insurance claim of $93,955.19," the Justice Department alleged.

Quicken Loans has said that the claims in the lawsuit aren't true, and that the government complaint is full of errors.

Quicken had filed a pre-emptive lawsuit against the DOJ early last week, in which the loan company said it's being unfairly pressured into agreeing to a costly settlement and admitting guilt in a faulty loan investigation.

Quicken alleged in the lawsuit that the Justice Department "repeatedly threatened a high profile lawsuit against the company" unless it admits to using flawed lending practices in issuing Federal Housing Administration Loans.

The lawsuits come after a three-year-long investigation from the Justice Department.

Federal investigators, according to Quicken's complaint, used a sample of 55
FHA loans out of more than 246,000 closed by the company to accuse the lender of wrongdoing.

"Many of the loans were categorized as 'defective' by Defendants because facts or documents allegedly were missing in the loan file. But in many cases the facts were proven and the documents were there," Quicken attorneys argued in the court filing.

"... In one loan, Quicken Loans was accused of poor underwriting because it miscalculated an FHA applicant's monthly income, when the error was only $2.10. Under FHA guidelines, and common sense, an immaterial difference like this is no bar to insurability."

Among the federal government's complaints are allegations that Quicken's business policies led employees to inflate borrowers' income and other numbers in order to push loans through.

According to the lawsuit, Quicken knew any loans that went bad were backed by the federal government, so it didn't have to worry about losing money.

Quicken Loans Founder Dan Gilbert has said multiple times on many platforms that his fight with the DOJ is "a moral, ethical type battle."

At an unrelated press conference Tuesday, Gilbert said he expected the lawsuits to take a while to resolve, but didn't appear to be worried about them.

He did not say Tuesday if he would take a settlement in the matter, but has said to multiple Detroit media that Quicken would not be bullied into a payment.

Gilbert owns over 70 properties in downtown Detroit, amounting to over 11 million square feet of real estate. He's invested over $1.7 billion in Detroit.

The full complaint from the Justice Department against Quicken is available here.

The full complaint from Quicken against the Justice Department is available here.


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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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