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U.S. Department Of Justice Sues Detroit-Based Quicken Loans

DETROIT (WWJ) - The U.S. Department of Justice is suing Quicken Loans, alleging the company lied to the government when making loans backed by the Federal Housing Administration.

Quicken is a mortgage lender headquartered in Detroit.

"The complaint alleges that Quicken approved loans that should not have been approved and submitted them for FHA insurance," said HUD Inspector General David A. Montoya, in a statement. "The alleged cost to the FHA insurance fund was millions of dollars and hopefully this serves as reinforcement to Quicken that doing the wrong thing really never is worth it."

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.

"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."

Following the announcement Thursday, WWJ and Fox 2 Business Editor Murray Feldman talked about the lengthy chain of events leading up to the lawsuit.

"The housing crisis was a major factor in bringing down the entire U.S. economy, and the feds have said they'd look into this, deep into this, and see what went wrong and who might have been involved," Feldman said.

"Now, this was a time when people who got mortgages and couldn't pay them lost their homes and couldn't pay them lost their homes. The companies who insured those mortgages took a hit, the ripple effect: the housing markets, the banks, the companies that insure loans — including the federal government, which backs a lot of loans," he said.

Feldman says it appears federal officials believes that some of the loans to those who didn't qualify properly, or loans that went bad, came from Quicken.

In a statement issued in response to the lawsuit, Quicken said the complaint filed by the Justice Department "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 statement continues, "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 minuscule number of loans out of the nearly 250,000 FHA mortgages the company has closed over the past seven years...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."

[Read the complete statement HERE].

This latest comes after, last Friday, Quicken Loans sued the U.S. Department of Housing and the Justice Department, alleging it is a target of a "political agenda."

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