| NEW YORK
NEW YORK A federal jury has ordered two
Texas-based home mortgage entities and their chief executive to
pay nearly $93 million for defrauding the U.S. government into
insuring thousands of risky loans, authorities said on
Americus Mortgage Corp, AllQuest Home Mortgage Corp, and
their founder, Jim Hodge, were found liable on Tuesday by a
Houston federal jury for violating the False Claims Act and the
Financial Institutions Reform, Recovery, and Enforcement Act.
The jury awarded nearly $93 million in damages, including
$7.37 million against Hodge, a sum that is subject to mandatory
tripling. Further penalties are expected, which U.S. District
Judge George Hanks will set at a later date.
A lawyer for the companies, which during the period at issue
were known as Allied Home Mortgage Capital Corp, Allied Home
Mortgage Corp, did not immediately respond to a request for
comment on Thursday.
The lawsuit was one of several brought by Manhattan U.S.
Attorney Preet Bharara's office in the wake of the 2008
financial crisis against lenders who underwrote loans insured by
the Federal Housing Administration's Direct Endorsement Program.
The lawsuit was announced in 2011, when Bharara's office
intervened in a pending whistleblower case. It was transferred
from New York to Texas in 2012.
The government contended that Allied Home Mortgage Capital
Corp operated over 100 "shadow" branch offices that originated
FHA-insured mortgage loans without approval from the U.S.
Department of Housing and Urban Development.
The government said that those undisclosed branches were not
subject to HUD oversight and that their mortgage default rates
were disguised as the loans were submitted using the ID numbers
of approved branches.
Allied Home Mortgage Corp also recklessly underwrote and
certified at least 1,192 loans that were ineligible for
insurance under HUD's guidelines, resulting in $85.6 million in
losses when the mortgages defaulted, the government said.
Bharara, in announcing the verdict, said the jury "held Mr.
Hodge and Allied responsible for their lies and has made them
pay for losses the United States suffered on loans that would
never have been insured by HUD absent their lies."