by Brian Mahany
Folk legend says cats have 9 lives. People don’t. Anyone following the storied career of mortgage pirate Jim Hodge might feel otherwise. We are confident, however, that the game is finally over.
Yesterday, HUD’s Mortgagee Review Board started the process to shut down Hodge once and for all. A letter from the Board to Hodge outlines 7 different charges including failure to implement a quality control plan, branch office violations, submitting false certifications and violating FHA underwriting requirements. Allied, which is now known as AllQuest Home Mortgage Corporation, has 30 days to respond to the charges.
Previously, Manhattan’s U.S. Attorney, Preet Bahara, intervened and adopted our false claims action that we filed last year against Allied and Hodge. The government seeks to collect $2.4 billion in that case thus making our case the largest false claims case anywhere in the United States against a mortgage lender. At the same time that the government sued Allied, HUD suspended Allied’s operation. All this occurred during the first few days of November 2011.
Apparently using one of his “9 lives,” Hodge convinced a federal judge in Houston that he should not be suspended without a hearing. Although the wheels sometimes turn a bit slow at HUD, yesterday’s notice means that Allied will get its hearing. We are absolutely confident that their operations will be suspended for good.
November’s HUD action wasn’t the first “near death” experience for Hodge. Back in August of 2003 Allied settled charges of improper branch operations brought by the Mortgagee Review Board, the same entity that is giving him his hearing now.
In September of 2003, Allied settled “upcharging” allegations brought by HUD claiming that Allied was excessively charging borrowers for credit reports.
Two years later in September of 2005 Allied settles HUD allegations that it improperly inflated the incomes of some buyers. Fudging the numbers on a loan application to get someone to qualify for lending often leads to higher default rates. When a federally insured loan defaults, taxpayers foot the bill. Not Allied.
In September of 2006 a different federal agency took action against Allied. This time the U.S. Department of Agriculture claimed that Allied mismanaged a rural rental housing loan program.
In November of 2007, the U.S. Department of Labor jumped into the fray by accusing Allied of not properly paying hundreds of employees. Allied settled those charges.
Although Allied and Hodge repeatedly denied any wrongdoing, in each case the company paid hefty fines to the government.
The most recent actions against AllQuest and Hodge are bittersweet to many former Allied employees. Although we firmly believe that Allied / AllQuest needs to be buried at the bottom of the sea, the massive federal actions against the companies means that there is little chance that hundreds of ex-employees will ever get paid. Allied may deny those claims too and continue to profess its innocence but the end of the road is near. If the current actions aren’t enough to sink Jim Hodge, USAToday disclosed that there is a criminal investigation by the U.S. Secret Service. That could mean criminal indictments are also forthcoming.
Mahany & Ertl is proud to have filed the record case against Allied and equally proud of the former Allied employees we have represented. Like most bad companies, the cancer is usually confined to the top. The rank and file loan processors, underwriters and branch office managers just tried to do their jobs and many didn’t get paid.
If you know of fraud within the mortgage or banking industry or feel that you have not received your proper pay and wages, give us a call. All inquiries are covered by the attorney client privilege and kept in confidence. For more information, contact attorney Anthony Dietz at .
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. Services available in many jurisdictions.
* This post is solely the opinion of the author and is based on public record, published reports and conversations with many former Allied employees.