Partial Victory for Quicken Loans in FHA Lawsuit

U.S District Judge Mark Goldsmith granted Quicken’s motion to dismiss that portion of the government’s case that related to mortgages made by Quicken before April 23, 2009, based on the statute of limitations.

But the judge rejected Quicken’s motion to dismiss most of the government’s case, including that Quicken had engaged in “reckless disregard” of government regulations when making loans backed by the Federal Housing Administration.

The split decision means that the Justice Department’s case against Quicken will move forward with most of the government’s most serious charges still intact.

The case stems from the collapse of the nation’s housing market in the Great Recession of almost a decade ago. The Justice Department has successfully negotiated large settlements with several mortgage lenders it accused of using inappropriate underwriting practices contributing to the collapse. But Quicken has denied all wrongdoing and vowed to fight the government’s case in court.

In its initial complaint filed in April 2015, the government said it based its case against Quicken on loans made between Sept. 1, 2007, and Dec. 31, 2011. Based on a timeliness issue, the judge Thursday barred the government from moving ahead on any claims submitted before April 23, 2009.

But Goldsmith said the government had the right to move ahead on several claims that Quicken’s underwriters and supervisors had recklessly disregarded FHA rules on writing government-insured mortgages. Among those allegations are that Quicken routinely used inflated appraisals, incorrect borrower’s income and other shortcuts and tactics to write mortgages that otherwise would not qualify under FHA rules.

In a statement late Thursday, Quicken responded to the ruling. “Quicken Loans is eager and more than prepared to prove to a jury that any remaining allegations are completely and totally false,” the statement said.