WASHINGTON (Sputnik) — US mortgage lender Quicken Loans originated and underwrote mortgages backed by the Federal Housing Administration (FHA) in violation of US federal laws protecting the housing market and the FHA fund, according to a US Department of Justice release.
“The United States has filed a complaint in the US District Court for the District of Columbia against Quicken Loans Inc. under the False Claims Act for improperly originating and underwriting mortgages insured by the Federal Housing Administration (FHA),” the release said on Thursday.
From September 2007 to December 2011, Quicken Loans deliberately submitted or purposed submission of claims for hundreds of improperly written FHA-insured loans and encouraged an underwriting process leading to employees disregarding FHA rules in falsely certifying compliance with underwriting requirements to receive profits from FHA-insured mortgages, the Justice Department alleged.
“Quicken allegedly had a ‘value appeal’ process where, when it received an appraised value for a home that was too low to approve a loan, Quicken often requested a specific inflated value from the appraiser with no justification for the increase,” the release said.
Quicken Loans granted “management exceptions,” where managers would allow underwriters to break an FHA rule to approve a loan, while senior managers were aware of the transgressions, according to the Justice Department.
As a result, HUD paid millions of dollars on insurance claims of loans improperly underwritten by Quicken Loans, while many loans become at least 60 days delinquent and may result in further insurance claims on HUD.
Quicken Loans is a Detroit, Michigan-headquartered online retail mortgage lender that is second largest in the United States. In 2012, Quicken Loans closed more than $70 billion in home loan value, a 133 percent jump over their record of $30 billion set in 2011, according to media reports.
