September 21, 2017

Texas Mortgage Companies Face $296.3M Judgment Related to Mortgage Fraud

By the C|C Whistleblower Lawyer Team

Allied Home Mortgage, and several other Allied companies, are facing a judgment over fraudulent conduct while participating in the FHA program. In a trial last November, a jury in Houston found that the companies and their CEO violated both the FCA and FIRREA, causing over $92M in single damages to the government. Now a judgment has been ordered by the court which trebled the verdict and imposed over $13M of additional statutory penalties under both the FCA and FIRREA. Allied’s CEO, Jim Hodge, was ordered to pay $25M in his personal capacity.

According to evidence presented at the trial, the companies abused the FHA mortgage insurance program by certifying thousands of high risk loans as FHA-insurance eligible and then submitting claims to FHA when those loans defaulted. Specifically, Jim Hodge approved hundreds of FHA-insured loans from Allied’s “shadow” offices, without the knowledge or consent of the Department of Housing and Urban Development. Allied also operated a “dysfunctional” quality control department what was both unqualified and understaffed, and actively submitted false reports to HUD auditors.

The United States intervened in this suit in November 2011 when it was in the Southern District of New York, it was moved to the Southern District of Texas in 2012. The case was brought by a whistleblower.

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