Emerson stressed that number represents a 0.02% error rate on some $108 billion in FHA-related lending from 2007 to the present.
"We did exactly what we said we would do from the beginning," Emerson said. "At the end of the day, I think this was a fishing expedition from a previous DOJ."
According to the complaint, between September 2007 and December 2011 Quicken knowingly submitted, or caused the submission, of claims for hundreds of improperly underwritten loans backed by the FHA. Quicken knowingly originated loans that could not meet FHA underwriting requirements through two ways, according to the lawsuit: the company's "management exception process" and its "value appeal" process.
For example, in the "value appeal" process, the government alleged that, if an appraisal value for a home came in too low, Quicken would routinely ask for a specific new and higher value from an appraiser, "often with no justification for the increase." That's prohibited under FHA guidelines.
In one instance, the complaint said, a borrower's bank account statement showed overdrafts over the course of numerous months. The borrower requested a refund of Quicken's $400 mortgage application fee so she could feed her family. The government says Quicken approved the loan anyway, and the borrower made only five payments before she defaulted. As a result, the complaint said, HUD paid a claim for nearly $94,000.And:
Quicken would also routinely approve improper FHA-backed loans because the FHA would have to cover the losses, according to the complaint.
In yet another email to senior executives, [Quicken's Operation Director, Mike] Lyon said Quicken approved a loan consisting of "lousy" parts that "when added up as a whole ... we would be hard pressed to lend this guy a dime out of our pocket."
Quicken CEO Bill Emerson responded, "Where is the upside on this one?"
Lyon answered: "[T]he only upside here is we have FHA insurance."
We welcome readers to submit letters regarding articles and content in Cleveland Scene. Letters should be a minimum of 150 words, refer to content that has appeared on Cleveland Scene, and must include the writer's full name, address, and phone number for verification purposes. No attachments will be considered. Writers of letters selected for publication will be notified via email. Letters may be edited and shortened for space.
Email us at firstname.lastname@example.org.
Support Local Journalism.
Join the Cleveland Scene Press Club
Local journalism is information. Information is power. And we believe everyone deserves access to accurate independent coverage of their community and state. Our readers helped us continue this coverage in 2020, and we are so grateful for the support.
Help us keep this coverage going in 2021. Whether it's a one-time acknowledgement of this article or an ongoing membership pledge, your support goes to local-based reporting from our small but mighty team.