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Quicken Loans preps to face U.S. over FHA loan violations

Latest update in the legal battle

Quicken Loans is revving up to face the Department of Justice after a federal judge tossed Quicken's lawsuit against the DOJ and the Department of Housing and Urban Development in January.

In a recent interview with Quicken Loans CEO Bill Emerson, Teresa Dixon Murray wrote in an article on Cleveland.com that the lender plans to step up efforts to fight the government now that its lawsuit against the government was dismissed.

In April 2015, Quicken sued the DOJ and HUD after they demanded it to make public admissions that were blatantly false, as well as pay an inexplicable penalty or face legal action. Quicken sued, stating that it was left with no alternative but to sue due to the DOJ’s demands.

The government was quick to react and countersued Quicken Loans six days later. In the United States government’s lawsuit, it accused Quicken Loans of improperly originating and underwriting loans that were insured by the FHA.

According to an announcement from the Department of Justice, 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 alleged 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.

Now, in the latest update from Cleveland.com, Quicken Loans is making its next move. The article states:

While many lenders have settled with the government, Quicken Loans says it will not. "The case is absurd," Quicken Loans CEO Bill Emerson said in an interview. "We're going to continue to fight it."

Quicken Loans had previously filed a motion to have the case heard in Michigan instead of Washington D.C. The company's lead counsel, Jeff Morganroth, said it makes much more sense to have the case heard by a jury in Michigan because all of he witnesses are in Michigan, as are all of the records and company officials.

The court has requested that Quicken Loans file papers to renew the motion; that's expected later this week. The company expects a ruling on the motion in the next couple of months, Morganroth said in an interview.

As a result of this whole ordeal, at the beginning of December, Quicken Loans said it is even considering ending its participation in FHA lending entirely, citing the government’s aggressive enforcement policies as the main reason for potentially dropping FHA lending.

"I'm not aware of anyone else that is fighting it like we are," Emerson said in the Cleveland.com article. "We're the lone soldier."

It’s this type of mentality from the lender that prompted this blog, “Why Quicken Loans is the Taylor Swift of the mortgage industry.”

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