A judge ruled on Monday that the Department of Justice and the Department of Housing and Urban Development's landmark case against Quicken Loans could transfer to the Eastern District Court in downtown Detroit. The move marks a significant win for Quicken Loans, allowing the battle to take place in its own stomping grounds.
Judge Reggie B. Walton provided the latest update on the case of USA v. Quicken Loans that dates back to April 2015. Walton's ruling granted Quicken Loans’ motion to transfer the DOJ lawsuit to the Eastern District Court in downtown Detroit.
Quicken Loans stated that its “headquarters and its 16,000 team members, as well as the vast majority of its loan processing and underwriting operations are all in Detroit, making the Eastern District Court the only appropriate venue to hear the government's ‘claims.’”
Quicken, which is the nation's largest Federal Housing Administration-backed mortgage lender, sued the DOJ and HUD in April 2015, stating that it was left with no alternative but to sue due to the DOJ’s demands.
“After three years of struggling to understand the DOJ's position and methodology that would warrant the country's largest and highest quality FHA lender to make untrue admissions and pay an inexplicable penalty or face public legal action, it is time to ask the court to intervene," said Quicken Loans CEO Bill Emerson at the time.
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 at the time, 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.”
However, Quicken Loans hit a roadblock in December of when a federal judge tossed out Quicken Loans’ lawsuit.
While Quicken Loans is still appealing its lawsuit against the government, it stated back in December that would continue to fight to defeat the government’s retaliatory lawsuit alleging that Quicken Loans violated the ‘False Claims Act.’
This latest news that the government granted the case transfer to the Eastern District Court in downtown Detroit rules on a motion from the lender filed back in February.
Quicken stated in its release that Walton “was apparently not persuaded by the government's bewildering arguments.”
One of the government’s arguments included that QL's sponsorship of a Washington, D.C.-area charitable PGA TOUR outing supporting troops justified hearing this case in the District of Columbia Court.
In response to the news, Dan Gilbert, Quicken Loans founder and chairman, said, "I think it is becoming increasingly clear what we have known all along: the DOJ case against QL has absolutely no merit.”
QL is the gold standard for residential lending in this country, he noted.
“We have had the FHA's lowest delinquency and default rates in the nation for years, resulting in billions of dollars of profits to the FHA insurance fund. It is obvious the DOJ made a conscious decision to exert pressure on the largest lenders in the country, using the weight of the federal government and its endless capacity to bring lengthy litigation and corresponding reputational damage without regard for the actual validity of its claims,” said Gilbert.
“DOJ's strategy was deployed for the sole purpose of extracting large settlements. We do not succumb to these egregious tactics,” he continued. “QL's outstanding reputation hard-earned over 31 years is not for sale."
It’s this same fiery talked that led Quicken Loans’ CEO Bill Emerson to go so far as to say that the FHA “has been hijacked by the Department of Justice.” Emerson made that allegation in a June interview with HousingWire.
As it stands, there is no exact date for when the lawsuit will be heard in court.