Feds sue mortgage broker, alleging lending fraud

Discussion in 'Law and Justice System' started by hvactec, Nov 2, 2011.

  1. hvactec

    hvactec VIP Member

    Jan 17, 2010
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    New Jersey
    NEW YORK — The federal government sued one of the nation's largest privately held mortgage brokers on Tuesday, saying its decade-long fraudulent lending practices cost the government hundreds of millions of dollars and forced thousands of American homeowners to face eviction.

    The lawsuit in U.S. District Court in Manhattan sought unspecified damages and civil penalties and named as defendants Houston-based Allied Home Mortgage Corp., founder Jim Hodge and Jeanne Stell, the company's executive vice president and director of compliance.

    Joe James, a company spokesman, said he was aware of the lawsuit but had not yet seen it. He declined immediate comment.

    In the lawsuit, the government said Allied until recently had the authority to originate mortgage loans insured by the U.S. Department of Housing and Urban Development, or HUD.

    It said nearly 32 percent of the 112,324 home loans originated by Allied between Jan. 1, 2001, and the end of 2010 have defaulted, resulting in more than $834 million in insurance claims paid by HUD.

    The lawsuit said the default rate climbed to "a staggering 55 percent" in 2006 and 2007, at the height of the housing boom, when the government paid $170 million to settle Allied's failed loans.

    The government said Allied made substantial profits through the loans while it violated rules meant to protect HUD's insurance fund and deceived the agency by originating loans for years out of hundreds of "shadow" branches that were not approved by HUD.

    The deceitful practice was continued under Hodge's direction even after several senior managers voiced concerns, the lawsuit said.

    "Allied operated with impunity for many years due a culture of corruption created by Hodge, who eliminated the position of chief financial officer and other senior management positions, intimidated employees by spontaneous terminations and aggressive email monitoring, and silenced former employees by actual and threatened litigation against them," the lawsuit said. "As a result, Allied was able to conceal its dysfunctional operations and maintain its profitable position in the mortgage industry."

    read more Feds sue mortgage broker, alleging lending fraud - WSJ.com
  2. waltky

    waltky Wise ol' monkey Supporting Member

    Feb 6, 2011
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    Okolona, KY
    Granny says, "Dat's right - sue `em, sue dey's socks off...
    S&P expects US lawsuit over its mortgage ratings
    Feb 4,`13 WASHINGTON (AP) -- The U.S. government is expected to file civil charges against Standard & Poor's Ratings Services, alleging that it improperly gave high ratings to mortgage debt that later plunged in value and helped fuel the 2008 financial crisis.

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