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Allied Home Mortgage Suspends Operations

Move follows FHA suspension, lawsuit by U.S. government

Nov. 3, 2011

By staff

The nation's self-proclaimed biggest mortgage broker has halted new business. In addition, its bank account has been frozen -- leaving staff unable to work.

On Tuesday, the Department of Housing and Urban Development disclosed that Allied Home Mortgage Corp. was suspended as an approved mortgagee.

The Federal Housing Administration has reportedly already paid $834 million in claims on loans originated by Allied, and another 2,509 pending claims could add $363 million more to the total.

Allied has reportedly originated 110,000 FHA loans during the past decade.

The company claims to be the "the nation's largest privately held mortgage banker and broker."

On the same day, the U.S. Department of Justice filed a civil lawsuit in U.S. District Court for the Southern District of New York against Allied, the company's president and chief executive officer James Hodge and Executive Vice President Jeanne L. Stell.

The complaint outlined a number of alleged violations of FHA guidelines and the prohibited operation of net branches that weren't FHA approved even though they allegedly originated government-insured loans.

Now the Houston-based company has suspended business.

A statement Thursday from Allied spokesman Joe James said that the firm has stopped originating loans.

Allied has previously claimed that it has "over $15 billion in loan experience and having handled as much as 12,000 loans per month."

The lawsuit is also impacting the company's employees.

"Some staff members are not working only because bank has frozen operating account as a result of the lawsuit," James said in today's statement.

The lawsuit indicated that Allied operates 600 branches -- though the branch count had been as high as 2,000.

Net Branching at Issue in Allied's FHA Suspension
Allied Home Mortgage Corp., which claims to be the "the nation's largest privately held mortgage banker and broker," has lost its ability to originate and securitize loans insured by the Federal Housing Administration and has been sued by the government over allegations of fraud. Claims on FHA loans funded by Allied are on track to exceed $1 billion. The company is accused of operating its offices as net branches in violation of FHA requirements.

Allied profile

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