The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Crooked Mortgage Schemes

Apr 27, 2015

The U.S. Department of Justice (DOJ) is suing Quicken Loans for knowingly submitting insurance claims to the Federal Housing Administration (FHA) on bad mortgages made by Quicken. The FHA says Quicken encouraged its employees to disregard FHA rules on lending, saying it routinely miscalculated or misrepresented borrowers’ credit standing and falsely certified that the loans met FHA requirements.

The Justice Department says the government paid “millions of dollars in insurance claims on hundreds of bad loans” due to Quicken’s practices and many more loans have become delinquent and could lead to more claims. It says the Department of Housing and Urban Development paid more than 500 million dollars in claims to Quicken on almost 4,000 defaulted loans; and more than 8,300 more FHA-insured loans made by Quicken, worth 1.1 billion dollars, are delinquent by at least 60 days.

The DOJ says the company “systematically concealed the underwriting defects” it knew of from its own audits. The suit includes internal emails acknowledging improper loans.

Quicken naturally denies any wrongdoing and says the DOJ was looking for a quick payoff by the company, which may in fact be true; but the company has denied accusations frequently in responding to past lawsuits, only to settle later.

Quicken Loans and its billionaire owner, Dan Gilbert, have been made out by politicians and the media to be the grand heroes of the re-building of a “New Detroit” being played up around the country. Gilbert now owns 70 buildings, garages and parking decks in downtown Detroit. Quicken received more than 200 million dollars in city and state tax incentives to move its headquarters downtown. Many of Gilbert’s buildings are located in the area of the city’s Downtown Development Authority, which controls all of the property taxes for the area completely separate from the budget of a city that recently went bankrupt.

This shows what the “New Detroit” is really about. People like Dan Gilbert take money scammed from poor people through crooked mortgage deals, and buy up buildings they don’t have to pay taxes on, leaving it to poor people in the city to pay even more in taxes. Then they get the government to pay for a new entertainment district, all the while leaving the rest of the city to rot.