From USA Today
A major mortgage company is facing a federal lawsuit in New York for what prosecutors allege were risky lending practices that caused massive home foreclosures.
The suit was brought by the U.S. Attorneys Office against Allied Home Mortgage Corp., claiming the company engaged in misconduct in their residential mortgage lending practices for almost a decade.
According to prosecutors, Allied originated a little over 110,000 Federal Housing Administration mortgages between 1997 and 2007, 30 percent of which ended in default. For loans originated from 2006-2007, however, Allieds residential home loan default rate rose to 55 percent.
The firm allegedly originated and fraudulently certified loans to high-risk borrowers, and then insured those loans with the FHA, which has already paid out over $800 million in insurance claims for the defaulted mortgages.
Also named in the lawsuit are Allied President and Chief Executive Officer Jim C. Hodge and Executive Vice President Jeanne L. Stell.