Quicken Loans has agreed to pay $32.5 million to settle claims that the lending giant resold faulty mortgages to the Federal Housing Administration. After the announcement of the agreement Friday, the lawsuit was dismissed by a federal judge.
In the lawsuit, the federal government accused Quicken Loans of not properly vetting FHA-insured loans by verifying borrowers’ income. Quicken Loans also allegedly used improper appraisals to issue larger mortgages, according to the lawsuit. Since the loans were insured by the FHA, Quicken Loans was paid even if the borrower defaulted.
Quicken Loans officials have denied any wrongdoing. The company did “nothing wrong” except pay for losses involving “human error,” Vice Chairman Bill Emerson told the Detroit Free Press. “Resolution is the right term, not settlement,” Emerson said, adding that the error was a 0.02% rate on some $108 billion in FHA-related lending since 2007.
Quicken Loans is one of the nation’s largest FHA lenders and will continue to remain in the FHA program.
“All parties fully understand the important role the FHA program plays in helping middle-class Americans access home financing, and this resolution allows the parties to move ahead together with that mission and to ensure their future relationship,” former federal judge Gerald Rosen, who was involved in mediation in the case, said in a statement. “The parties worked diligently and in good faith to mediate for a solution to resolve their differences and to put the dispute behind them.”
Source: “Quicken Loans to Pay $32.5M to Settle Lawsuit Over Bad Loans,” Associated Press (June 14, 2019) and “Quicken Loans to Pay $32.5 Million to Resolve Mortgage Suit,” Detroit Free Press (June 14, 2019)