Quicken Loans, the largest Federal Housing Administration (FHA) lender in the country, is standing its ground in a government lawsuit for allegedly knowingly submitting claims for hundreds of improperly underwritten FHA-insured loans.
This is not the first time that the online mortgage lender has pleaded its case against mortgage fraud allegations from the Department of Justice (DOJ) and will likely not be the last.
CEO of Quicken Loans Bill Emerson came forward this week to let the DOJ know that it will not settle and admit to committing fraud.
According to an interview with CNBC's "Squawk Box," Emerson said, "For us, that's not something we can even begin to stomach," he told CNBC, saying he welcomes a jury trial. "[To] look our 12,000 team members in the eye and say, 'guess what, we committed fraud against the United States government' … we didn't. We won't say it."
Emerson also admitted to CNBC that Quicken did make "simple mistakes," but the DOJ is "dead wrong" in its accusations of mortgage fraud against them.
The lender filed a suit in April 2015 in the U.S. District Court for the Eastern District of Michigan against the U.S. Department of Justice and the Department of Housing and Urban Development, claiming the agencies have been trying to bully the company into making “blatantly false” statements and demanding the company pay “an inexplicable penalty or face legal action,” according to a statement released by Quicken.
The Justice Department followed in less than a week with a suit against Quicken Loans accusing them of submitting or causing the submission of claims for hundreds of improperly underwritten loans insured by the FHA from September 2007 to December 2011. On the same type of issues, the DOJ has gone after many other lenders, which resulted in more than $100 million in mortgage settlements.
The Detroit-based lender claims the government has enjoyed “extraordinary profitability for FHA's insurance program” through its efforts, saying the company’s participation in FHA's program will earn the government more than $5.7 billion in net profits “from the insurance premiums collected above and beyond claims made from over $40 billion in FHA home loan volume closed by Quicken Loans during the 2007 to 2013 timeframe.”
"After three years of struggling to understand the DOJ's position and methodology,” Emerson noted in a previous statement, “it is time to ask the court to intervene. It's a shame the DOJ would choose to attack the country's largest and highest quality FHA lender … at the very time our nation needs expanded access to credit for middle-class Americans who benefit most from the FHA program.”