US Government Files Complaint Against Quicken Loans for Improper Lending Practices
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Ridofranz/iStock/Thinkstock(WASHINGTON) — The U.S. government has filed a complaint against Quicken Loans, accusing the company of “improperly originating and underwriting mortgages insured by the Federal Housing Administration.”
“Those who do business with the United States must act in good faith, including lenders that participate in the FHA mortgage insurance program,” said Principal Deputy Assistant Attorney General Benjamin Mizer. “To protect the housing market and the FHA fund, we will continue to hold responsible lenders that knowingly violate the rules.”
Quicken participated in the FHA insurance program as a direct endorsement lender, which gave the company the authority to originate, underwrite and certify mortgages for FHA insurance.
Under the direct endorsement lender program, the mortgages are not reviewed by the FHA or the Department of Housing and Urban Development, forcing the lender to adhere to program rules. The government alleges that from September 2007 to December 2011, Quicken submitted or caused the submission of hundreds of improperly underwritten FHA-insured loans.
Examples of improper actions included having appraisers inflate the value of a home for which the value was too low to approve a loan and granting “management exceptions,” allowing underwriters to break rules to approve loans.
The government alleges that the Department of Housing and Urban Development has paid millions in insurance claims on improperly underwritten loans.
“Quicken needs to be held accountable for violations of HUD requirements in the origination of FHA loans,” HUD General Counsel Helen Kanovsky said.
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