Quicken Loans sued by feds over home loans
NEW YORK (CNNMoney) — The U.S. government sued Quicken Loans Thursday alleging the company violated federal rules when it made loans backed by the Federal Housing Administration.
The suit claims that Quicken’s culture “elevated profits over compliance.”
The Department of Justice accuses the lender of making loans it knew violated FHA rules between 2007 and 2011.
The FHA, a government agency, insures mortgages to help banks lend to buyers who might not be able to get loans otherwise.
In turn, banks that issue FHA-backed loans must certify that the borrowers meet certain criteria to minimize the risk of default.
The Justice Department alleges, for example, that Quicken employees requested inflated appraisals and “spoke of ‘fudging’ a borrower’s income in order to gain approval for FHA insurance.”
As a result, Quicken profited from these loans, even when borrowers defaulted on their mortgages. Ultimately, the suit says this resulted in millions of dollars in losses for the government.
Quicken, based in Detroit, didn’t immediately return a call for comment. But the company, which says it’s the nation’s biggest FHA lender, seems ready to fight.
On April 17, Quicken sued the Justice Department and federal housing officials over their investigation into its lending.
“The company was left with no alternative but to take this action after the DOJ demanded Quicken Loans make public admissions that were blatantly false, as well as pay an inexplicable penalty or face legal action,” Quicken said in a statement.
The lender said it has “the government agency’s best performing loan portfolio.” Quicken said it maintains the “gold-standard in quality for FHA lending.”