U.S. Sues Major Mortgage Broker Over Lending Fraud | WAMU 88.5 - American University Radio

NPR : News

Filed Under:

    U.S. Sues Major Mortgage Broker Over Lending Fraud

    In a lawsuit filed against one of the largest private mortgage brokers in the country, the United States alleges fraudulent lending practices by Allied Home Mortgage Capital Corp. cost the government $834 million in insurance claims paid by the Department of Housing and Urban Development.

    "Allied has profited for years as one of the nation's largest FHA lenders by engaging in reckless mortgage lending, flouting the requirements of the FHA mortgage insurance program, and repeatedly lying about its compliance," the U.S. said in the complaint, according to Bloomberg. "In the past decade, Allied has originated loans out of hundreds of branches it never disclosed to HUD."

    As the AP explains it, what the government alleges was going on here is that Allied had a number of unauthorized branches that worked with little to no quality control and which the government claims circumvented rules put in place to protect HUD, which resulted in a higher-than-usual number of homeowners falling behind on their mortgages. From 2006 to 2007, the default rate on mortgages the company sold was 55 percent.

    The AP reports:

    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."

    Allied has not yet commented on the lawsuit.

    Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.

    NPR

    What's A Writer Gotta Do To Get A Little Health Care Around Here?

    When you're making plans to become a famous author, just remember that you're going to want health care — especially when 40 rolls around and your body is no longer made of rubber.
    NPR

    When Zero Doesn't Mean Zero: Trans Fats Linger In Food

    One in 10 packaged foods still contains trans fats, according to a new study. The problematic oils give foods a rich taste and texture and extend shelf life, but have been linked to heart disease.
    NPR

    Rep. Ryan Calls For 'Culture Of Inclusion' To Tackle Poverty

    Congressman and former Republican vice presidential nominee Paul Ryan discusses his new book, The Way Forward: Renewing the American Idea.
    NPR

    New Amazon Series Pilots Fall Short Of A TV Revolution

    NPR TV critic Eric Deggans ranks Amazon's new batch of five series pilots, asking why none of them seem break the rules of TV quite enough to draw attention.

    Leave a Comment

    Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.