A decade-long scheme of systemic fraud by Houston-based Allied Home Mortgage Capital Corp. cost taxpayers $834 million in insurance claims on defaulted loans and forced thousands of the company’s customers to lose their homes through mortgages that were “doomed to fail,” according to a lawsuit filed by a former branch manager of the company and which the U.S. government officially joined yesterday. Allied Home, which is based in offices at 6110 Pinemont Dr. (above) off the Northwest Fwy. not far from Houston’s new FBI HQ, claims to be the largest privately held mortgage company in the country (99 percent of the company is owned by founder Jim Hodge), with 200 branches, down from a high of 600. Separately, the company has now been suspended from issuing any FHA-backed loans or GNMA-backed mortgage securities.
***
Part of Allied Home’s notable lending record: Almost one third of the 112,324 FHA-backed loans it originated between 2001 and 2010 defaulted, according to the lawsuit. In 2006 and 2007, the government claims, the default rate reached 55 percent. The U.S. Dept. of Housing and Urban Development could face up to $363 million more in insurance claims from Allied Home’s 2,509 loans currently in default.
Included in the company’s bag of tricks, according to prosecutors: fraudulent paperwork and a network of “shadow” branches which claimed to be HUD-approved but were not. Branches with high default rates would apply for new HUD ID codes under tweaked addresses or under the name of a sister company — Allied Home Mortgage Corp. — in an attempt to deceive regulators, according to the filing. “If and when we have sufficient evidence for a criminal case, we’ll bring it,” U.S. Attorney Preet Bharara announced at a press conference yesterday.
- Feds File Massive Fraud Case Against Allied Home Mortgage, Texas Mortgage Firm Survives and Thrives Despite Repeat Sanctions, Timeline: Allied’s Trail of Sanctions, and Head of Allied Home Mortgage Has Had a Bumpy Journey [ProPublica]
- Allied Lawsuit
- HUD Suspends Allied Home Mortgage Corp. and CEO [HUD]
- Allied Home Mortgage Is Sued Over Bad Loans [NY Times]
Photo: Merchant Circle
Four years ago the default rate on the business they were generating was 55% and a full third of their business over ten years was non-performing? Fast forward FOUR YEARS LATER and now we’re gonna go get him. Like a mongoose on a cobra.
In front of this building, to the right of the staircase, there used to be a sign that said “witch parking”. Not sure why?
Long overdue. The FEDS should go after ALL mortgage companies. Seems most,if not all, mortgage companies underwrote loans that have gone underwater. The FEDS will only go after the least politically connected firms !!!
Mongoose on a cobra, FEDS should go after ALL mortgage companies……. these are completely irresponsible comments about a situation which you probably have no idea about the details. How about refraining from the slander and the obtuse comments until you know what is going on?
@ JW: Are you Jim Hodge in disguise? Sounds like it.
Really clever investigatory skills aside, I think it’s safe to say I am not.. I’m sure you would agree that his time is probably being spent doing more productive work right now than writing on a blog. Sound like it?
At present I am retiered, however I worked in the mortgage business for 32 years. Only a few of the people caused these problems. Most were and still are doing the best job they can do. Remenber this when you say “The Fed’s should go after All the Mortgage Companies”.