Quicken Loans to pay $32.5 million to settle FHA lending case

Quicken Loans to pay $32.5 million to settle FHA lending case


Detroit-based Quicken Loans Inc. will pay $32.5 million to settle a federal lawsuit tied to Federal Housing Administration lending standards, according to a statement released Friday by the mediator in the case.

The settlement comes with no admission of wrongdoing. The statement says the settlement consists of $25.5 million to make the government whole for losses and $7 million in interest, according to the statement from the 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, utilize Quicken Loans for this very important loan program," Quicken Loans CEO Jay Farner said in a written statement. "Now that this dispute is behind us, we look forward to cultivating and expanding our relationship with both FHA and HUD so we can increase Americans' access to home financing and homeownership."

In 2015, the U.S. Department of Justice filed a lawsuit saying that Quicken Loans originated hundreds of FHA-backed loans between September 2007 and December 2011 when they were not eligible for the program because of Quicken Loans lenders overstating a borrower's income so they could qualify for the loans.

The Justice Department also said the U.S. Department of Housing and Urban Development has paid $500 million in claims on 3,900 Quicken Loans-endorsed loans.

In an interview with Crain's on Friday, Bill Emerson, vice chairman of Quicken Loans, said the lender "never committed fraud or anything like that." He said the company has done $108 billion in mortgages since 2007 and the $25.5 million settlement represents 0.02 percent of that.

"We fought this case and it's been resolved in a manner that we believe is exactly what we said we would do," Emerson said. "If you take a look at how this case started and the demands they made of us and the dollar amounts they wanted from the very beginning, this case continued to get smaller and smaller each time we looked at it."

U.S. District Court Judge Mark Goldsmith dismissed the federal government's lawsuit against Quicken Loans on Friday, according to court records. In April, Goldsmith ordered the two sides into mediation talks led by Rosen, a retired chief judge of the Eastern District of Michigan.

Quicken Loans will continue to participate in the FHA lending program, according to the statement. "FHA relies on 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's Assistant Secretary for Public Affairs. Read more




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