Department of Justice files lawsuit against Quicken Loans (UPDATED)

 The Justice Department has filed a lawsuit against Quicken Loans Thursday.

According to published reports, it is accusing the Detroit-based lender of violating mortgage underwriting rules causing losses in the millions of dollars to the U.S. Housing and Urban Development agency.

"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 C. Mizer of the Justice Department's Civil Division.  "To protect the housing market and the FHA fund, we will continue to hold responsible lenders that knowingly violate the rules."

The government's complaint alleges that from Sept. 2007 through Dec. 2011, Quicken submitted or caused claims for hundreds of improperly underwritten FHA-insured loans. Among the allegations are that senior management knew of the alleged problems and never had a quality control program for deficient loans. 

To read the full Department of Justice statement, CLICK HERE.

Quicken Loans released a statement rebuking the claims saying the complaint filed is "riddled with inaccurate and twisted conclusions from fragments of a handful of emails cherry-picked from 85,000 documents that the DOJ subpoenaed."

The entire statement from Quicken:

"Quicken Loans is the FHA's largest lender. By its own objective public reporting, FHA ranks Quicken Loans the highest quality (lowest default rate) lender of any large FHA originator in the United States. The FHA mortgages Quicken Loans originated are projected to generate billions in profits (net of claims) for the government from the insurance premiums on the $40 billion in FHA volume the company has closed since 2007. Today's DOJ filing is simply the continuation of the abusive actions and a make-good on the DOJ's threats since their witch-hunt began three years ago, as detailed in the lawsuit Quicken Loans filed against the DOJ last week. 

The complaint filed today is riddled with inaccurate and twisted conclusions from fragments of a handful of emails cherry-picked from 85,000 documents that the DOJ subpoenaed. Worse than that, the DOJ appears to be basing their entire case on a handful of out-of-context email conversations skimmed from the communication between Quicken Loans employees.  These conversations relate to a miniscule number of loans out of the nearly 250,000 FHA mortgages the company has closed over the past seven years. 

The real victims in this unjust claim are the millions of middle class American families who rely on FHA financing to reach their goal of affordable home ownership.  For now, Quicken Loans plans to continue offering FHA mortgages to our clients, but like nearly every lender in the country, we will be evaluating the prudence of our continued participation in the FHA program.

Those who work for the federal government must act in accordance with the laws of the United States, including those who work for the United States Department of Justice. The Constitution provides for checks and balances among the three branches of government. The irrational and baseless claims by this powerful federal agency will be exposed in Federal court.  We are confident that after examining the facts, the judicial branch will clearly see the outrageous actions of the DOJ and exercise its authority to end this agency's misuse of power." 

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