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Allied Mortgage Capital

Home Loans Chester VA Allied Home Mortgage Capital Corp.

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Allied Home Mortgage ordered to pay $296 million for widespread FHA fraud

According to the U.S. Attorney’s Office, United States District Judge George C. Hanks Jr. of the Southern District of Texas, who presided over the trial, elected to increase the jury’s award under provisions of the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act.

Under the False Claims Act, the jury’s award is subject to mandatory trebling, meaning the award would be tripled. The False Claims act also allows for a per-violation penalty, while FIRREA allows for a penalty of up to $1.1 million for each violation.

Under those guidelines, Hanks trebled the $92 million in damages. Hanks also imposed a penalty of $10,000 for each violation of the FCA found by the jury for a total of $12,950,000 in FCA penalties, and the maximum $1.1 million penalty for each violation of FIRREA for a total of $6.6 million in FIRREA penalties.

That brings the total judgment to $296,298,325.

Hodge is also liable for more than $25 million in damages and penalties.

Jury Awards $93 Million in Federal Fraud Case Against Allied Home Mortgage

A federal jury has ordered two Texas-based home mortgage companies and their chief executive to pay nearly $93 million for defrauding the government by issuing improper and risky home loans that later defaulted.

The companies, formerly known as Allied Home Mortgage Capital Corp. and Allied Home Mortgage Corp, and their founder, Jim C. Hodge, were the subject of July 2010 stories by ProPublica , which detailed a trail of alleged misconduct, lawsuits and government sanctions spanning at least 18 states and seven years. Borrowers said they’d been lied to by Allied employees, who in some cases had siphoned loan proceeds for personal gain. Some borrowers had lost their homes.

Despite the years of warnings, the federal government didn’t restrict Allied’s ability to issue mortgages until 2011, when prosecutors intervened in a pending whistleblower case and sued Hodge and both Allied companies in U.S. District Court in Manhattan. Simultaneously, the U.S. Department of Housing and Urban Development suspended Allied and Hodge from issuing loans backed by the Federal Housing Administration. Allied was also barred from issuing mortgage-backed securities through the Government National Mortgage Association (Ginnie Mae).

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