by Brian Mahany
Allied Home Mortgage is no stranger to controversy. Although the largest private mortgage lender in the U.S., it has been the subject of numerous regulatory investigations and lawsuits. According to the Federal Register, Allied was just terminated by HUD from the Direct Endorsement program.
The Direct Endorsement program allows Allied and other lenders to underwrite single-family mortgage loans and submit them for FHA insurance. Institutional investors want the FHA backing so they know they can collect if the borrower defaults. Without the backing of someone like the Federal Housing Administration, home mortgages can’t readily be bought and sold.
The mortgage industry depends on brokers making sure loans are only given to qualified applicants. Much of the blame for the current mortgage crisis sits squarely on the shoulders of sloppy mortgage lenders.
When real estate kept going up and up and up, lenders got sloppy and wrote loans to people who couldn’t pay or didn’t qualify. Ultimately the bubble burst and home prices plummeted. By 2011, however, you would think sloppy underwriting practices would be a thing of the past. Apparently they are not.
HUD, of course, wants to make sure that mortgage brokers don’t cut corners and only write loans to qualified borrowers. HUD recently terminated Allied after the default rate of mortgages written by them in Ohio exceeded 250% of the average. In other words, Allied default rate is 2.5 times higher than the average. That’s a lot of bad loans.
Allied can reapply after 6 months but it must submit a report from an independent auditor outlining the reasons for the high default rate and offering a corrective action plan.
We believe that much of the problem lies with Allied and the tremendous financial pressures placed on local branch office managers. In many instances, manages cut corners and wrote loans they shouldn’t have just to pay their bills.
Allied is not alone in this latest crackdown and not all of its offices are affected.
If you were one of the nearly 2,300 branch managers employed or contracted by Allied and think you might have been defrauded, we may be able to get back some of your money. Contact us today.
[Disclosure – we presently represent several people with claims against Allied.]
Mahany & Ertl is a full service law firm with offices in Milwaukee, Wisconsin and metropolitan Detroit, Michigan. Our lawyers help victims of fraud and people and businesses with tax problems. Our highly experienced trial lawyers are unafraid to take on any defendant or agency, no matter how large or powerful. We have helped people across the U.S.