The Justice Department took a big shot at Dan Gilbert's Quicken Loans and filed a lawsuit in Washington against the Detroit-based company, alleging that it knowingly submitted, or caused the submission of claims for hundreds of improperly underwritten FHA-insured loans, the Detroit Free Press reports.
The feds say it cost the government millions of dollars to cover the insured loans.
John Gallagher of the Freep writes that the federal lawsuit filed on Thursday alleges that Quicken encouraged its employees to disregard FHA rules and falsely certify compliance with underwriting requirements in order to reap the profits from FHA-insured mortgages. The allegations cover a period from September 2007 through December 2011.
Gallagher writes:
For example, the government's complaint states that when Quicken received an appraised value for a home that was too low to approve a loan, Quicken often requested a specific new and higher value from the appraiser with no justification for the increase. That practice is prohibited by FHA rules.
Quicken Loans called the lawsuit a witch hunt.
"The complaint filed today is riddled with inaccurate and twisted conclusions from fragments of a handful of emails cherry-picked from 85,000 documents that the DOJ subpoenaed. Worse than that, the 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 number of loans out of the nearly 250,000 FHA mortgages the company has closed over the past seven years," Quicken's statement said.
The government blamed the crash of the economy around 2008, known as the Great Recession, on faulty mortgage loans that were issued around the country by various financial institutions. In many instances, those loans were knowingly given to people who didn't earn enough income to afford them.
Quicken Loans has long denied that it was involved in those type of practices. -- Allan Lengel
