The U.S. Department of Justice has filed suit against Allied Home Mortgage Capital Corp and two top executives over fraudulent lending practices that have cost the government more than $834 million of insurance claims. In the Complaint, filed in the U.S. District Court in Manhattan, the Justice Department said Allied profited for years as one of the nation’s largest Federal Housing Administration lenders by “engaging in reckless mortgage lending, flouting the requirements of the FHA mortgage insurance program, and repeatedly lying about its compliance.”
Other Defendants in the lawsuit are Allied Chief Executive Jim Hodge, and Executive Vice President Jeanne Steel. The lawsuit seeks triple damages under the federal False Claims Act as well as civil penalties and other remedies. You may recall that the government has also charged Deutsche Bank AG with fraud in a lawsuit. The bank was accused of misleading the FHA into insuring risky mortgages. Deutsche Bank has sought to dismiss that lawsuit which seeks $1 billion in damages.
Source: Insurance Journal
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