Monday marked the first of what will likely be many hearings between Quicken Loans and the Department of Justice before U.S. District Judge Mark A. Goldsmith over FHA lending violation charges.
The two parties are first meeting for a hearing on Quicken Loans’ request to have the case dismissed, but if denied, the trial will begin in April 11, 2019.
This first hearing is the culmination of a battle between Quicken Loans and the DOJ, along with the Department of Housing and Urban Development, that dates back to April 2015.
The last update on the case came in November 2016 when a judge ruled that the DOJ and HUD’s case against Quicken Loans could transfer to the Eastern District Court in downtown Detroit.
The move was a significant win for Quicken Loans, allowing the battle to take place on its own stomping grounds.
As a recap, Quicken, which is the nation's largest Federal Housing Administration-backed mortgage lender, sued the DOJ and HUD in April 2015. Quicken accused Justice of trying to squeeze money from companies which would usually wish to avoid a costly legal battle against FHA violation charges. Instead of paying up, Quicken said it decided to fight back in court.
The government was quick to react and countersued Quicken Loans. In the United States government’s lawsuit, it accused Quicken Loans of improperly originating and underwriting loans insured by the FHA.
And while Quicken Loans hit a roadblock in December when a federal judge tossed out its lawsuit, it will continue to fight to defeat the government’s retaliatory lawsuit alleging that Quicken Loans violated the ‘False Claims Act.’
According to an announcement from the Department of Justice at the time of the lawsuit, the government 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 government’s complaint 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.
Quicken Loans denied those charges, with now-former and recently promoted, CEO Bill Emerson going so far as to say that the FHA “has been hijacked by the Department of Justice.”
“The DOJ’s clear scheme has been to target the biggest FHA lenders in the country to elicit large cash settlements by threatening long, burdensome and costly litigation, as well as its resultant reputational damage. The DOJ’s scheme has resulted in over $6 billion of settlements,” a Quicken Loans spokesperson said.
Quicken Loans is quick to clarify that it has been, and is currently, ranked the highest quality FHA lender in the country, according to the FHA’s own objective, public reporting.
“Said another way, Quicken Loans has the lowest delinquency and default rate of all FHA lenders. The 50-state mortgage lender’s default rate is approximately .33%, which outperforms the FHA’s overall national average default rate by 3 times,” it stated.
