US DoJ Sues Quicken Loans for filing false claims on government-insured mortgages

It is alleged that Quicken Loans, one of the largest US mortgage lenders, is facing a lawsuit filed by the US Department of Justice for filing false claims on government-insured mortgages and other violations.

On Thursday, the US District Court for the District of Columbia filed the complaint and said the company lied to the government when making loans backed by the Federal Housing Administration (FHA).

The court claimed that mortgages insured by the company were improperly originated and underwrote by the company.

In a statement Housing and Urban Development (HUD) Inspector General David A. Montoya said, “The complaint alleges that Quicken approved loans that should not have been approved and submitted them for FHA insurance. The alleged cost to the FHA insurance fund was millions of dollars and hopefully this serves as reinforcement to Quicken that doing the wrong thing really never is worth it”.

According to the government’s complaint, Quicken knowingly submitted, or caused the submission of, claims for hundreds of improperly underwritten FHA-insured loans from September 2007 through December 2011.

The complaint further alleged that Quicken organized and encouraged an underwriting process that led to employees disregarding FHA rules. It also led them to falsely certify compliance with underwriting requirements to reap the profits from FHA-insured mortgages.

Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division said that lenders that participate in the FHA mortgage insurance program and the ones who do business with the United States must act in good faith.

He added that they will continue to hold responsible lenders that knowingly violate the rules in order to protect the housing market and the FHA fund.

Several lenders such as including JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Deutsche Bank AG and MetLife Inc have resolved federal lawsuits over FHA-insured loans.