Allied Home Mortgage Capital Corp. has agreed to settle allegations by the U.S. Department of Housing and Urban Development of billing discrepancies at its branches. The settlement by the self-proclaimed biggest mortgage broker follows the loss of FHA approval at one of its branches earlier this year and a scathing news story last month about the branch operator.
The agreement with HUD was disclosed today by Allied. The company will pay a civil money penalty of $38,000.
HUD reportedly alleged that the Houston-based company had not paid all of the operating costs for its branch offices. Initial findings from HUD’s inquiry indicated that nearly 400 bills had not been paid by Allied during a 27-month period.
Allied, which claims to be “the nation’s largest privately held mortgage banker and broker,” said it disputed the findings.
“Following a comprehensive review of the supporting documentation — including examination and validation of the actual bills and receipts — only a small number of accounting records for five branch locations could not be located to support payment of the bills,” Allied said.
A second news release today from Allied indicated that a HUDÂ review started in July 2009 has found only “minor issues with a small number of files,” including underwriting and documentation errors.
“HUD found no instances of fraud or other misrepresentation by Allied Home Mortgage Corp. in any of the files,” the statement said.
Allied Chief Executive Officer Jim Hodge noted in the second statement that although the company regrets any mistakes, “statistically this is well within or much better than industry standards” — especially given the size of the company and the volume of originations.
Allied said it has agreed to indemnify HUDÂ on six loans, pay $46,000 in civil money penalties and refund $2,400 to borrowers. The company has been granted more time by HUD to resolve another loan.
A Maryland branch of Allied lost its FHA approval in April.
Last month, an article in USAÂ Today said Allied “has left behind a trail of alleged misconduct and piecemeal government sanctions spanning at least 18 states and seven years.” Less than two weeks later, Allied announced that it appointed Jeanne L. Stell compliance manager.
