Allied Home CEO asks judge to stop suspension

NEW YORK Thu Nov 3, 2011 7:54pm EDT

NEW YORK Nov 3 (Reuters) - A home mortgage company and its chief executive -- facing civil fraud charges by the U.S. government -- asked a judge to declare that their suspensions by the federal housing agency failed to provide them with due process of law.

Allied Home Mortgage, CEO James Hodge and another top executive were sued on Tuesday by federal prosecutors in New York, who said they ran a decades-long fraud that cost the government hundreds of millions of dollars on risky home loans.

On Thursday, U.S. District Court Judge Melinda Harmon in Houston, Texas did not immediately rule on an injunction.

"The court finds that it needs more information to make a decision on the request for injunctive relief in this case," Harmon said in a written order. She scheduled a hearing for Nov. 8.

The U.S. Department of Housing and Urban Development (HUD) suspended Allied's origination and underwriting approval and Hodge from participating in any Federal Housing Authority-insured lending.

In their own lawsuit in U.S. District Court in Houston on Wednesday, Allied and Hodge described the decision as "arbitrary and capricious."

In an email on Thursday night, HUD spokesman Brian Sullivan declined to comment on Hodge's legal action.

The case is Allied Home Mortgage Corp v Shaun Donovan, Secretary of the United States Department of Housing and Urban Development et al, U.S. District Court, Southern District of Texas, No. 11-03864.

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