Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Economy
Related: About this forumJury Finds Allied Home Mortgage Entities and CEO Liable for Civil Mortgage Fraud- Awards $92 Million
https://www.justice.gov/usao-sdtx/pr/jury-finds-allied-home-mortgage-entities-and-ceo-liable-civil-mortgage-fraud-awards-92Department of Justice
U.S. Attorneys Office
Southern District of Texas
FOR IMMEDIATE RELEASE
Wednesday, November 30, 2016
Jury Finds Allied Home Mortgage Entities and CEO Liable for Civil Mortgage Fraud - Awards $92 Million in Damages
Also Face Trebling of Damages and Additional Mandatory Penalties for Fraudulent Conduct
HOUSTON A federal jury has found the entities formerly known as Allied Home Mortgage Capital Corporation (Allied Capital) and Allied Home Mortgage Corporation (Allied Corporation) as well as president and CEO Jim C. Hodge liable in connection with more than a decade of fraudulent misconduct related to Allieds participation in the Federal Housing Administration (FHA) mortgage insurance program. The jury returned the verdicts late yesterday following a five-week trial, finding Allied and Hodge violated the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA).
(snip)
The jury awarded the United States a total of $92,982,775 in damages, including $7,370,132 against Hodge specifically. Pursuant to the FCA, the damages in this case are subject to trebling. In addition, the court must impose a mandatory penalty of $5,500 to $11,000 for each violation. Separately, FIRREA also provides for a penalty for each statutory violation. U.S. District Judge George C. Hanks Jr., who presided over the trial, will determine the total penalties and damages at a later date.
(snip)
FHA mortgage insurance makes home ownership possible for millions of American families by protecting lenders against mortgage defaults. FHA mortgage insurance also makes mortgage loans valuable in the resale market. To protect the continued availability of FHA mortgage insurance funds, HUD must accurately assess the risk of default on the loans it insures. To accomplish this task, HUD relies on assurances by lenders that they, and the loans they submit for insurance, comply with program requirements.
As a HUD-approved loan correspondent, Allied Capital originated FHA-insured mortgage loans and was required to seek HUD approval for each branch office from which it originated such loans. Allied Capital did not comply. Instead, with Hodges approval, Allied Capital operated more than 100 shadow branch offices that originated FHA loans without HUD authorization. As part of its scheme to deceive HUD, the jury heard that Allied Capital submitted loans originated by those branches to HUD using the ID numbers of approved branches. Allied Capitals undisclosed shadow branches were not subject to HUD oversight and their default rates were disguised by the default rates of branches whose IDs they were using. This fraudulent misconduct resulted in $7,370,132 in losses to HUD when some of those loans defaulted.
The jury also heard that Allied Corporation, as a participant in HUDs Direct Endorsement Lender program, underwrote FHA-insured mortgage loans. For each FHA-insured mortgage loan, Allied Corporation was required to certify to HUD that the loan was underwritten according to HUDs guidelines. Those guidelines ensure that FHA-insured loans are made only to borrowers who can repay them, thereby seeking to avoid losses to HUDs FHA insurance fund and foreclosures on borrowers homes. Allied Corporation, however, recklessly underwrote and certified at least 1,192 loans for FHA insurance under HUDs guidelines. This fraudulent misconduct resulted in losses to HUD of $85,612,643 when those loans defaulted.
To compound matters, Allied Capital and Allied Corporation (Allied) and Hodge operated a dysfunctional quality control program and lied to HUD about it. HUD requires lenders participating in its programs to timely perform quality control audits of their FHA loans to identify and correct systemic problems, including underwriting problems. Allied only employed a handful of quality control employees to review loans from as many as 600 branch offices. Further, many of those employees were unqualified to audit FHA-insured loans. In addition, Hodge personally directed his employees to falsify quality control reports to give the impression that required reviews had been performed, when in fact they had not. When HUD auditors later asked for those quality control reports, Allied provided the falsified reports. Allied and Hodge also falsely certified to HUD on an annual basis that Allied was in compliance with HUDs quality control requirements.
(snip)
InfoView thread info, including edit history
TrashPut this thread in your Trash Can (My DU » Trash Can)
BookmarkAdd this thread to your Bookmarks (My DU » Bookmarks)
2 replies, 1017 views
ShareGet links to this post and/or share on social media
AlertAlert this post for a rule violation
PowersThere are no powers you can use on this post
EditCannot edit other people's posts
ReplyReply to this post
EditCannot edit other people's posts
Rec (1)
ReplyReply to this post
2 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
Jury Finds Allied Home Mortgage Entities and CEO Liable for Civil Mortgage Fraud- Awards $92 Million (Original Post)
nitpicker
Dec 2016
OP
mercuryblues
(14,491 posts)1. How long before
Jim C Hodge is named housing Czar?
Tansy_Gold
(17,817 posts)2. Thank you!!!!
Thank you, nitpicker, for posting these. I am going to add some of them to our daily Stock Market Watch wall of shame, as I have time and as they are especially pertinent. I've been reading them when I have time -- which I never have enough of! -- and have sadly neglected to thank you for them.
The wheels of justice. . . . .