U.S. District Judge Melinda Harmon has ruled that Allied Home Mortgage Corp., the Houston-based lender entangled with federal agencies over claims of fraud, can once again originate and underwrite Federal Housing Administration (FHA)-insured loans, Bloomberg's Businessweek reports.
Two weeks ago, the U.S. attorney for the Southern District of New York filed a civil mortgage fraud lawsuit against Allied and two executives, including President and CEO Jim Hodge. That same day, U.S. Department of Housing and Urban Development's Mortgagee Review Board suspended the company, alleging numerous violations.
Hodge subsequently petitioned Harmon to allow Allied back into the FHA fold. According to Hodge, losing the FHA credentials would effectively wipe out 70% of Allied's business even before the case could be brought before a judge. Harmon found the argument compelling.
"The potential destruction of plaintiffs' business outweighs any harm that would be suffered by the government before the issues can be litigated," Harmon said in her court order, according to Businessweek.