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.
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