Detroit-based Quicken Loans Inc. will pay $ 32.5 million to settle a federal lawsuit over Federal Housing Administration lending standards, according to a statement released by the mediator in the case on Friday.
The settlement comes with no admission of wrongdoing. The statement says the settlement consists of $ 25.5 million to return the entire government for losses and $ 7 million in interest, according to the statement by mediator, former federal judge Gerald Rosen.
“We have always been proud of our growing participation in the FHA program. Every day teachers, police officers, factory workers and so many others who are the backbone of our communities use Quicken Loans for this program. very important loan, ”said the CEO of Quicken Loans. Jay Farner said in a written statement. “Now that this dispute is behind us, we look forward to cultivating and expanding our relationship with the FHA and HUD so that we can increase Americans’ access to finance and home ownership.”
In 2015, the US Department of Justice filed a lawsuit claiming that Quicken Loans issued hundreds of FHA-guaranteed loans between September 2007 and December 2011, when they were not eligible for the program because lenders of Quicken Loans overestimated a borrower’s income so that he could qualify for the loans.
The Department of Justice also said the US Department of Housing and Urban Development paid $ 500 million in claims on 3,900 loans approved by Quicken Loans.
In an interview with Crain’s Friday, Bill Emerson, vice president of Quicken Loans, said the lender “has never committed fraud or anything like that.” He said the company had taken out $ 108 billion in mortgages since 2007 and the $ 25.5 million settlement was 0.02% of that.
“We fought this case and it was resolved in a way that we believe is exactly what we said we would do,” Emerson said. “If you look at how this business started and the demands they made on us and the dollar amounts they wanted from the very beginning, this business kept getting smaller and smaller every time we got it. have examined. “
U.S. District Court Judge Mark Goldsmith on Friday dismissed the federal government’s lawsuit against Quicken Loans, court records show. In April, Goldsmith ordered the two sides to begin mediation talks led by Rosen, a retired chief justice of the Eastern District of Michigan.
Quicken Loans will continue to participate in the FHA loan program, the statement said. “The FHA is leveraging its partnerships with lenders, such as Quicken Loans, to advance home buying opportunities for Americans, and we look forward to continuing our relationship with Quicken Loans,” said Amy Thompson, HUD Assistant Secretary for Public Affairs.
The lawsuit had long been on the minds of Quicken Loans founder and chairman Dan Gilbert, who started the company in 1985 and is now worth more than $ 7 billion, according to Forbes.
Gilbert was very critical of the DOJ in a interview 2015 with the Detroit Free Press.
“This is what happens when you dare to stand up for justice and the truth before the Department of Justice,” he told the newspaper. “It was an attempt to embarrass us and keep pressuring us to write checks of an enormous size to settle (the allegations) make them go away and admit things that did not happen.
“They’re talking about an investigation that spanned three full years, 85,000 subpoenaed documents… and that’s what they come up with – a few anecdotes and a few fragments of email chains taken out of context.” Gilbert said four years ago. .
In addition, the mortgage lender has more quietly simmered behind the scenes. In April 2015, a Quicken Loans administrative web address was used to register as many as 25 web domains for DOJ.
These are domain names including DepartmentOfJusticesBullies.com, Department OfJusticeShakedown.com, DOJBullies.com, and DOJShakedown.com, among others. At one point in the past two years, Gilbert had “bureauclowns” written on a board in a Quicken Loans office on the 10th floor.
Quicken Loans sued a few days before the Justice Department filed its complaint, but the complaint was dismissed. The company said the federal government violated administrative procedure law in its investigation and claimed the government improperly guessed a pattern of violations based on a sample of loans guaranteed by the FHA through Quicken Loans, rather than review all loans individually.