Articles Posted in Mortgage Fraud

 Quicken Loans Inc. has sued the U.S. Housing and Urban Development Department and the Justice Department, saying that it’s being unfairly pressured into agreeing to a major settlement and admitting guilt in a faulty loan investigation.

Quicken Loans is a mortgage lender and now says in  a complaint filed Friday in federal court that the U.S. Justice Department has “repeatedly threatened a high profile lawsuit against the company” unless it admits to using flawed lending practices in issuing Federal Housing Administration Loans.

The Justice Department filed a lawsuit last Thursday against Quicken , the nation’s third-largest mortgage lender, alleging that it made hundreds of improper loans through the Federal Housing Administration lending program, costing the agency millions of dollars.

The United States has filed a complaint in the U.S. District Court  against Quicken Loans Inc. under the False Claims Act for improperly originating and underwriting mortgages insured by the Federal Housing Administration (FHA), the Justice Department announced today.  Quicken is a mortgage lender headquartered in Detroit.

The government’s complaint alleges that, from September 2007 through December 2011, Quicken knowingly submitted, or caused the submission of, claims for hundreds of improperly underwritten FHA-insured loans. The complaint further alleges that Quicken instituted and encouraged an underwriting process that led to employees disregarding FHA rules and falsely certifying compliance with underwriting requirements in order to reap the profits from FHA-insured mortgages.  For example, Quicken allegedly had a “value appeal” process where, when Quicken received an appraised value for a home that was too low to approve a loan, Quicken often requested a specific inflated value from the appraiser with no justification for the increase– even though such a practice was prohibited by the applicable FHA requirements.  Quicken also allegedly granted “management exceptions” whereby managers would allow underwriters to break an FHA rule in order to approve a loan. Continue reading

A brave whistleblower named Lynn Szymoniak went from a homeowner facing foreclosure to winning an $18 million settlement for blowing the whistle on the nation’s largest mortgage company for “robosigning fraud.””Robo-signing” is the illegal practice of forging mortgage documents.

Featured on 60 minutes, Ms. Szymoniak told how the documents underpinning homeowners’ mortgages are sometimes missing or nonexistent. Banks need such documents to foreclose on a homeowner, so some banks have resorted to fraud: creating phony or “robo-signed” paperwork to throw people out of their homes. Continue reading

Herschell Harvell Jr., 53, of Conyers, a special agent of the Office of Inspector General of the U.S.Department of Housing and Urban Development, was indicted on charges that he made false statements to a bank to obtain a mortgage loan. It was also alleged that he  conspired to obstruct an investigation of his real estate transactions, said U.S. Attorney Sally Quillian Yates.

Harvell was indicted along with his nephew, Tavus A. Wright, 32, of Milledgeville, who was charged with conspiracy, obstruction of justice and perjury, Yates said. Continue reading

Allied Home Mortgage Corp’s CEO Jim Hodges and Exec VP Jeanne Stell have been named as defendants in a federal action joined by Uncle Sam and originally brought by whistleblower Peter Belli who was a branch manager. The government alleges that Allied submitted false loan certifications to the Department of Urban Development to obtained HUD-backed insurance for mortgage loans.

The Complaint says that for more than 10 years, Allied originated loans out of hundreds of branches it never dislocsued to HUD and that these “shadow branches” operated in regions which HUD had suspended Allied’s power to originate loans given the areas’ high default rates.

The suit also details that Allied lied to obtain HUD approval for its branches, falsified quality control reports and that it fabricated reports that included verification of borrowers’ income and employment when the verifications had in fact not been done.

JP Morgan has been sued in a civil action by the New York attorney General for allegedly defrauding investors who lost more than $20 billion on mortgage backed securities sold by Bear Stearns. JP Morgan bought the investment bank Bear Stearns in March 28 at the behest of the US government.  The lawsuit accuses Bear Stearns of failing to ensure the quality of loans underlying residential mortgage-backed securities. The complaint says that the bank “systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects underlying loans.” The lawsuit says that this led to the inclusion of When many of the homebuyers defaulted their mortgages this linked securities to bad debt and caused billions in losses at banks who were forced to write down the value of their investments. Banks around the globe lost billions of dollars because these securities were resold globally.