Dan Gilbert's Quicken Loans sued by U.S. government
Quicken Loans, the mortgage lending business founded by Cleveland Cavaliers owner Dan Gilbert, has been sued by the United States Department of Justice, the DOJ announced Thursday.
The DOJ accuses Quicken of "improperly originating and underwriting mortgages insured by the Federal Housing Administration" from September 2007 to December 2011. The company also encouraged employees to disregard FHA rules, the DOJ alleges.
The Department of Housing and Urban Development (HUD) "has already paid millions of dollars of insurance claims on loans improperly underwritten by Quicken," the DOJ said.
If a home was appraised at a value too low to be approved for a loan, Quicken would request an inflated value from the appraiser without justification for the increase, according to the DOJ.
Quicken sued the DOJ and HUD last week "after the DOJ demanded Quicken Loans make public admissions that were blatantly false, as well as pay an inexplicable penalty or face legal action."
"As the complaint alleges, Quicken violated HUD's quality standards when obtaining HUD insurance for mortgage loans," U.S. Attorney John Walsh of the District of Colorado, whose office helped to lead the investigation, said in a statement. "Quicken issued hundreds of defective mortgage loans, and left HUD – and the taxpayer – to pay for the loans that defaulted. Quicken’s alleged fraudulent conduct affected communities nationwide. This case is the latest step in our commitment to hold accountable mortgage lenders who profit by taking advantage of HUD insurance and issuing defective loans that do not meet HUD’s standards."
Quicken dismissed the suit as "the continuation of the abusive actions and a make-good on the DOJ’s threats since their witch-hunt began three years ago."
"The complaint filed today is riddled with inaccurate and twisted conclusions from fragments of a handful of emails cherry-picked from 85,000 documents that the DOJ subpoenaed," Quicken said in a statement. "Worse than that, 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 miniscule number of loans out of the nearly 250,000 FHA mortgages the company has closed over the past seven years."
Gilbert bought the Cavaliers in March 2005 and renamed the team's arena after his company. Gilbert also owns the minor-league hockey Lake Erie Monsters and NBA D-League's Canton Charge.
- Dan Gartland
