Judge Lifts Allied’s Injunction, Allows Lender to Pursue HUD Lawsuit

An injunction granted to Allied Home Mortgage that offered the mortgage lender relief from a suspension was recently dismissed.

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In November 2011, Allied was barred by ""HUD"":http://www.hud.gov/ from originating and underwriting new FHA insured-mortgages. The agency also suspended Allied's president and CEO, James C. Hodge.

HUD accused Allied of violating HUD/FHA requirements by originating loans from branch offices not FHA approved and for submitting false information, among other violations. In the complaint, Allied was said to have cost FHA $834 million for the fraudulently originated loans that went into default.

Allied countered with its own lawsuit and filed for declaratory and injunctive relief. The mortgage lender said the suspension was ""arbitrary and capricious"" and done without respecting its right to due process. Allied also said the suspension ""will effectively kill Allied Corporation as an ongoing business.""

A federal judge in Houston ""provided Allied with the preliminary injunction"":http://dsnews.comarticles/judge-allows-allied-to-resume-issuing-fha-insured-loans-2011-11-16, which was recently lifted by U.S. District Judge Gray Miller. According to the court documents, Miller stated that it was ""absolutely clear that the allegedly [improper notice procedure and administrative action complained of] could not reasonably be expected to recur.""

However, Miller did allow Allied to continue with its claim for declaratory relief, stating that their allegations of continuing harm were ""concrete and particularized.""

Miller also declined HUD's request to have the case transferred to the Southern District of New York.