A federal judge has reversed HUD's decision to temporarily ""suspend"":http://dsnews.comarticles/hud-and-ginnie-mae-suspend-allied-home-mortgage-2011-11-01 Allied Home Mortgage Corporation after the agency accused the bank of committing fraud and violating several FHA requirements.
[IMAGE] According to ""_Bloomberg,_"":http://www.businessweek.com/news/2011-11-16/allied-home-mortgage-s-fha-privileges-reinstated-by-judge.html U.S. District Judge Melinda Harmon decided ""The potential destruction of plaintiffs' business outweighs any harm that would be suffered by the government before the issues can be litigated.""
The U.S. attorney for the Southern District of New York first filed suit against Houston-based Allied and its CEO,[COLUMN_BREAK]
James C. Hodge, at the beginning of the month, and HUD suspended the bank from issuing new FHA-insured loans the same day.
Allied and Hodge immediately countered with a suit of their own, calling the allegations against them ""arbitrary and capricious"" and asserting that ""the immediate suspension of authority to originate and underwrite loans will effectively kill Allied Corporation as an ongoing business.""
According to its court filing, FHA-insured mortgage loans make up 70 percent of Allied's business.
Harmon ruled Tuesday that HUD's suspension of Allied would cause irreparable harm to Allied before the bank had a chance to defend itself, according to _Bloomberg._
According to a statement by the U.S. attorney who filed the suit against Allied, FHA has already paid $834 million ""for mortgages originated and fraudulently certified by ALLIED that are now in default.""
The attorney alleges Allied's fraudulent activity has occurred for a decade.
Hodge and Allied deny the allegations against them.