A multi-million dollar company embroiled in a mortgage fraud case formally requested that the lawsuit against them be dismissed. However, a U.S. District Court Judge just ruled that the case can go forward after all. The Judge ruled that the company involved must address accusations that it willfully misled officials at the United States Department of Housing and Urban Development. According to those officials, the company misrepresented its loans in order to secure Federal Housing Administration insurance administered by HUD.
There were tens of thousands of those loans, with the majority of them being high-risk. If the accusations are true, the company pursuing the insurance acted in an illicit manner with taxpayer money and jeopardized the status of at least a thousand homeowners. Allegations by the government contend that the company's leaders created a "culture of corruption" that contributed to the country's housing crisis.
When ruling that the lawsuit could go forward against the company, the judge additionally ruled that comparable claims could be pursued against the company's chief executive and their compliance officer as well. The government is expected to pursue both of those claims. However, the judge ruled that a lawsuit could not go forward against a separate corporation. That corporation had purchased many of the assets originally owned by the company accused of fraud, but are protected from the suit by laws governing the liability of all successor companies. The judge gave the government 14 days to alter its complaint. The original version of the lawsuit was first filed in November 2011. It sought triple damages on a variety of defaulted loans and civil fines as well.
Mortgage fraud legal cases affect taxpayers, government institutions, and homeowners throughout the country. This is especially true for Florida, where a many homes are bought and sold each day. Residents of the Sunshine State deserve the strongest safeguards possible when working with mortgages.
Reuters, "U.S. can pursue mortgage fraud case versus Texas broker: judge" Jonathan Stempel, Sep. 11, 2013