Uncle Sam sues Quicken Loans and Quicken sues back

Quicken Loans Inc. has sued the U.S. Housing and Urban Development Department and the Justice Department, saying that it’s being unfairly pressured into agreeing to a major settlement and admitting guilt in a faulty loan investigation.

Quicken Loans is a mortgage lender and now says in a complaint filed Friday in federal court that the U.S. Justice Department has “repeatedly threatened a high profile lawsuit against the company” unless it admits to using flawed lending practices in issuing Federal Housing Administration Loans.

The Justice Department filed a lawsuit last Thursday against Quicken , the nation’s third-largest mortgage lender, alleging that it made hundreds of improper loans through the Federal Housing Administration lending program, costing the agency millions of dollars.

The F.H.A. does not make loans itself, but insures them. Participating lenders, including Quicken, which makes more F.H.A. loans than any other institution, have the authority to originate, underwrite and certify mortgages covered by F.H.A.insurance. Under the program, if the borrower later defaults, the holder of the loan can file an insurance claim to cover losses.

The Department of Justice says  Quicken knowingly submitted claims “or caused the submission of claims” on hundreds of bad loans, and encouraged an underwriting process in which employees disregarded the program rules and falsely certified that loans met the requirements.

The Justice Department,has already  settled with several lenders over their F.H.A. lending practices, including JPMorgan Chase, SunTrust, U.S. Bank, and Bank of America.

Jeffrey Newman represents whistleblowers.