In an early bit of legal wrangling, Quicken Loans Inc. is trying to get a U.S. Justice Department lawsuit against it consolidated with Quicken’s own lawsuit filed in federal court in Detroit and to have the cases heard in the Motor City rather than in Washington, D.C.
At issue in the dispute is whether Detroit-based Quicken Loans, one of the nation’s biggest mortgage lenders and the largest online lender, improperly originated and underwrote government-insured mortgages between 2007 and 2011.
Quicken, saying the Justice Department had been threatened a lawsuit for years over the allegations, filed a lawsuit earlier this month in U.S. District Court in Detroit seeking a court declaration that its lending practices were proper.
A few days later, the Justice Department filed its own suit in Washington, alleging improprieties in how Quicken originated and underwrote loans insured by the Federal Housing Administration. The government claimed in its suit that Quicken fudged borrowers’ income levels and pushed appraisers to increase low appraisals for houses so that Quicken could write more loans under FHA guidelines.
Quicken has denied all the allegations.
The Justice Department alleged that borrowers defaulted on many improperly written loans, costing the government millions of dollars in insurance payouts.
The government seeks unspecified damages.
In a motion filed Wednesday in U.S. District Court for the District of Columbia, where the government’s lawsuit was filed, Quicken’s attorneys claim that their lawsuit in Detroit takes precedence as the first one filed and that the government’s lawsuit should either be delayed until Quicken’s case is heard or to have the two cases consolidated and heard in Detroit.
Hearing the cases in Detroit would offer Quicken a logistical edge, if nothing else. The federal courthouse in Detroit is a short walk from Quicken’s headquarters in the Compuware Building, whereas Justice Department attorneys and FHA officials would have to travel to the city for court hearings.
And it may be that Quicken may feel it has a better shot with a Detroit area jury and judge than in Washington.
Wherever the cases are heard, Quicken’s motion filed Thursday is just the most preliminary of skirmishes in what promises to be a long battle.
