Quicken Loans has agreed to pay the government $32.5 million to resolve a federal suit over its lending practices involving Federal Housing Administration (FHA) loans.
The agreement brings an end to a long-simmering feud between Quicken and both the Department of Housing and Urban Development (HUD) and the Department of Justice (DOJ). Quicken — the nation’s largest FHA lender — sued the two federal departments in 2015, claiming that HUD and DOJ demanded that Quicken admit FHA lending-based wrongdoing that didn’t exist. The DOJ then declared Quicken in violation of the False Claims Act, saying the Detroit-based nonbank knowingly submitted hundreds of improperly underwritten FHA loans. The DOJ alleged that Quicken’s underwriting process encouraged employees to overlook red flags in loans that didn’t pass federal muster and mark them compliant to push the company’s profits upward.
Quicken vowed to fight those charges, and at one time, Quicken chair Dan Gilbert claimed the company would never settle. Bill Emerson, Quicken’s vice chair, still asserts that it hasn’t, saying instead that the company corrected previous accounting mistakes with regards to some loans.
“We didn’t settle,” Emerson told The Detroit News. “[W]e did exactly what we said we would do. We looked at some of the loans, and there were a few we made a mistake on. We made them whole. That’s all we did.”
“We did exactly what we said we would do, that we would fight this case. There was no case. There is no case. There are no findings of wrongdoing of us at all. There were a handful of loans that we made a mistake on. That’s exactly what happened.”
Emerson didn’t clarify what mistakes had been made, but he’s accurate on at least one point: There is no finding of wrongdoing against Quicken Loans. U.S. District Judge Mark Goldsmith resolved dismissed the government’s suit without any findings of wrongdoing against or admission of guilt from either side. The resolution was agreed upon after the two sides were ordered into mediation by Goldsmith in April.
Per the final resolution agreement, $25.5 million of the final $32.5 million payment is earmarked to the government “for any losses it may have incurred.” The other $7 million will be paid in interest.
The case was dismissed with prejudice, meaning it is permanently closed and can’t be brought back to court. After the (non)settlement, both sides released amicable statements pledging continued cooperation to grow American homeownership.
“Today, HUD reached an important resolution with Quicken Loans so that, together, we may continue offering safe and sustainable mortgage financing to qualified, creditworthy borrowers,” said Amy Thompson, HUD’s assistant secretary for public affairs. “FHA relies on its partnerships with lenders, such as Quicken Loans, to advance home buying opportunities for Americans, and we look forward to continuing our relationship with Quicken Loans.”
“Now that this dispute is behind us,” echoed Quicken CEO Jay Farner, “we look forward to cultivating and expanding our relationship with both FHA and HUD so we can increase Americans’ access to home financing and homeownership.”