Sunday, November 6, 2011

Feds Seek Triple Damages, Fines In Suit Alleging Bankster Duped HUD/FHA Into Insuring Crappy Home Mortgage Loans

In New York City, Reuters reports:

  • Prosecutors sued a large U.S. mortgage broker and two top executives for an alleged decade-long fraud that cost the government hundreds of millions of dollars on risky home loans.

  • The lawsuit seeks triple damages and civil fines against Allied Home Mortgage Capital Corp, which once billed itself as the largest privately held U.S. mortgage broker; Jim Hodge, its founder and chief executive; and Jeanne Stell, an executive vice president and compliance director.

  • It contended that Allied violated the federal False Claims Act by misleading the government into believing its loans qualified for federal insurance, when its mortgages were so poor nearly one in three went into default.

  • This "reckless" lending, it said, cost the Department of Housing and Urban Development (HUD) $834 million in insurance claims and forced thousands of homeowners out of their homes.

For more, see U.S. sues Allied Home Mortgage for lending fraud.

For the U.S. Attorney (Manhattan) press release, see Manhattan U.S. Attorney Sues Allied Home Mortgage, CEO, And Executive Vice President For Fraudulent Lending Practices Currently Associated With $834 Million In Insurance Claims Paid By HUD (One of the Nation's Top Privately Held Mortgage Lenders Operated 'Shadow Branches' and Allegedly Lied About Its Compliance With HUD Regulations).

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