US Files $834 Million Lawsuit Against Allied Home Mortgage

It appears the feds are set on getting taxpayer money back from the housing mortgage debacle.

On Tuesday, the US Attorney’s office in New York filed suit against Allied Home Mortgage in an effort to recover more than $834 million alleging fraudulent mortgage insurance claims.

According to the lawsuit, Allied originated 112,324 HUD-sponsored loans from 2001 to 2010, 35,801 of which have since defaulted; this includes 6,404 in the first six months of the loan. Allied was previously stripped of its HUD-approved lender status.

The complaint alleges that Allied originated mortgages out of “shadow branches” that the company did not disclose to the Department of Housing and Urban Development (HUD), among other allegations of HUD violations.

Under HUD requirements, the complaint said, Allied should have paid the operating costs of each branch.

This appears to be the latest step by the federal government to end the status quo approach to violating the law.

What’s your opinion of the US attorney attempting to recoup money lost by taxpayers? Overdue or overdone? Do you know of other mortgage firms that conducted business the way Allied is alleged to have done in the suit?

Please share your thoughts with us.