Dallas-based AmericaHomeKey (AHK) is fighting back against an announcement that the U.S. Department of Housing and Urban Development (HUD) has banned it from originating and underwriting new mortgages insured by the Federal Housing Administration (FHA).
Courthouse News Service reports that AHK has filed a lawsuit against the department and HUD Secretary Shaun Donovan, seeking the withdrawal of a press announcement of the termination of AHK's participation in the FHA program. AHK argues that it no longer originates mortgages and HUD published the press announcement before the department's 30-day appeal period had expired. AHK adds that it is continuing to sell loans that were locked in before March 12 to Ally Bank, and that the HUD announcement would damage its business.
‘Upon information and belief, the publication of the press release prior to the appeal deadline is unwarranted because plaintiff has already sold substantially all of its loan origination business and plaintiff is unable to originate any mortgage loans at this time,’ says AHK in its complaint. ‘The premature publication of the press release would result in irreparable damage to the business relationship between plaintiff and Ally Bank, including the ability of Ally Bank to sell loans that have been previously locked by plaintiff prior to the termination of plaintiff's FHA/HUD approval. Specifically, once the press release is published, investors who are expected to purchase the locked mortgage loans from Ally Bank will withdraw their commitments, resulting in a loss of approximately $14 million worth of mortgage loans and $1 million worth of income to plaintiff.’
HUD did not publicly respond to the lawsuit.