Allied Mortgage Fires Back, Sues HUD and Seeks Return of FHA Privileges

After being sued and suspended by the Department of Housing and Urban Development for violations of Federal Housing Administration policy, Allied Home Mortgage Corporation sued the government back and requested a federal judge in Houston to restore its FHA origination and underwriting abilities. The judge denied the request before reversing her decision and asking for more information, Bloomberg Businessweek reports.

Allied, which was suspended on November 1 for alleged fraud, has touted itself as the largest closely held mortgage broker in the U.S.

“This is a half-baked attempt to put another mortgage broker out of business so HUD can say it is cleaning up the industry,” Bruce Alexander, Hodge’s attorney, told Bloomberg Businessweek.

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A claim filed in New York Federal Court alleges that 112,324 loans originated by Allied from 2001 through 2010 have defaulted, forcing HUD to pay $834 million in insurance claims.

Hodge has said Allied’s loss of FHA origination and underwriting abilities would eliminate more than 700 jobs and would “effectively kill” the mortgage company’s business.

“Allied Corporation is unable to originate any FHA-insured mortgage loans. This means that Allied Corporation is effectively out of  business, because FHA insured mortgage loans constitute 70% of its business,” the court documents state.

Allied originated 133 reverse mortgages last year according to data from ReverseBase.

Read the Bloomberg Businessweek article.

Written by Elizabeth Ecker

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  • If this entity created the mess which is indicated, it should go out of business.  Their concern about jobs rings hollow and seem to appeal at a political level rather than demonstrating a miscarriage of justice. 

  • Allied Home Mortgage is a parasitic subprime mortgage brokerage that survived the predatory lending meltdown by finding a willing host in FHA. Their disreputable business practices continue at the expense of the American taxpayer. As someone who has had the grave misfortune of working for branches of Allied Home Mortgage and meeting members of the Jim Hodge cult, I am only surprised that their day of reckoning has not come sooner. I have often heard that cock roaches are the only species that would survive a nuclear holocaust; such is the case with Allied Home Mortgage and the subprime meltdown.

  • It speaks to support HUD’s assertion of misconduct that Allied officials aren’t claiming that those 112k loans were properly processed and underwritten and went into default due to unrelated circumstances. I agree with The_Cynic that their justification for staying in business plays to the economic problems facing the country making it a political issue. We all ought to play by the same rules.

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