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RETRACTION: Judge Rules on Allied Motion

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MortgageDaily.com incorrectly reported Tuesday that the federal judge in the lawsuit entitled Allied Home Mortgage Corp. and James C. Hodge, Plaintiffs, v. Shaun Donovan et al had ruled on Allied’s motion for a preliminary injunction.

The order on file with the court was only a proposed order and has not been signed by the judge in the case.

According to Allied’s law firm, Weiner Brodsky Sidman Kider PC, the judge is not expected to rule until later this week.


Story as Originally Reported

In its motion for a preliminary injunction, Allied Home Mortgage Corp. warned that if the judge didn’t force the Department of Housing and Urban Development to reinstate it as an approved mortgagee — the company would be put out of business and its more than 700 employees would be unemployed. On Tuesday, the judge ruled on Allied’s motion.

HUD suspended Allied as a Federal Housing Administration lender on Nov. 1. The housing agency noted that $834 million in FHA claims have already been paid on Allied’s originations and another 2,509 pending claims could add $363 million more to the total.

The suspension by HUD was accompanied by a lawsuit filed by the U.S. Department of Justice 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.

Allied fired back by filing its own lawsuit in U.S. District Court for the Southern District of Texas against HUD Secretary Shaun Donovan and the housing agency itself seeking to have the suspension set aside.

“The suspension of Allied Corporation’s authority to originated FHA loans will force this company to close and would render unemployed nearly all of the 723 current employees,” the lawsuit said.

Today, the judge ruled on Allied’s motion.

“On this day came on for consideration the plaintiffs’ motion for preliminary injunction along with the defendants’ opposition to plaintiffs’ motion for preliminary injunction,” U.S. District Judge Melinda Harmon wrote in her decision. “And the court having considered the arguments of counsel and the evidence presented finds that the plaintiffs’ motion should be denied.

It is therefore ordered that the plaintiffs’ motion for preliminary injunction is hereby and in all things denied.”

Allied, which claims to be the “largest branch network company in America,” operates 152 active branches. The company confirmed on Nov. 3 that it suspended operations.

Allied was founded in 1991.

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