Just days after filing a lawsuit against the government, Quicken Loans Inc. has become a defendant in an apparent retaliatory action.
The Detroit-based company filed a federal lawsuit
on April 17 alleging that the Department of Justice was pressuring it to agree to a False Claims Act settlement.
Quicken said that it is being targeted by the Justice Department not because there are any problems with its origination of loans insured by the Federal Housing Administration, but only because it is the largest FHA lender.
The move was cheered by many in the mortgage industry.
But the preemptive action by Quicken has been met with a federal lawsuit filed against it by the government, according to a Justice Department announcement Thursday.
The government alleges that Quicken implemented an underwriting process that led to employee disregard for FHA requirements. The online lender is accused of  falsely certifying compliance with underwriting requirements so that it could profit from FHA-insured mortgages.
Hundreds of FHA-insured loans were submitted for claims from September 2007 through December 2011.
The government cited manipulated appraisal values and management exceptions to FHA rules.
An email from the divisional vice president of underwriting, the second most senior executive in Quicken’s operations department, allegedly said, “I don’t think the media and any other mortgage company (FNMA, FHA, FMLC) would like the fact we have a team who is responsible to push back on appraisers questioning their appraised values.”
Another email from the same executive reportedly said that
40 percent of the management exceptions on FHA’s early payment defaults should not have been granted.
“We make some really dumb decisions when it comes to client service exceptions,” the message reportedly stated. “Example, purchase loan we pulled new credit and the client stopped paying on almost everything and the scores fell by 100 points, we [still] closed it”
The government cited an email from the operations director that said “the loan was approved based on ‘bastard income,’ which he described as ‘trying to put some kind of income together that is plausible to the investor even though we know its creation comes from something evil and horrible.”
The allegedly improperly underwritten loans have already cost the Department of Housing and Urban Development
millions of dollars in insurance claims, according to the government.
Several examples of poor lending practices were cited by the government.
