Quicken lawsuit to move to Detroit

A government lawsuit against Detroit-based Quicken Loans Inc . will move to the mortgage lender’s hometown, a federal judge ruled Monday, after finding that the Washington, D.C., connection to Quicken’s practices was too “insubstantial” to keep the case there.

U.S. District Judge Reggie Walton on Monday changed course from a Jan. 19 ruling denying a previous Quicken transfer request. But Walton had given Quicken permission to bring a renewed request, and found this time a “balance of factors” in the case favored a transfer to Detroit.

“The only connection with the District of Columbia is that (the Federal Housing Administration ) and other government employees in this district received the allegedly false statements and claims made by Quicken, which were submitted and processed through systems administered by FHA staff in this district. (But) the Court has previously rejected such arguments (in other cases) …,” U.S. District Judge Reggie Walton in Washington wrote in a Monday ruling.

“It is doubtful that the issuance of such policies or the receipt of such submissions will be the main focus of the dispute; rather, it is the decisions that Quicken employees made in (Southeast Michigan) that are at issue in this False Claims Act matter.”

The U.S. Department of Justice contends in an April 2015 lawsuit that the Detroit-based mortgage lending market leader originated hundreds of loans between September 2007 and December 2011 backed by the FHA when they were not eligible for the program. It also contends the U.S. Department of Housing and Urban Development has paid $500 million in claims on 3,900 Quicken-endorsed loans.

Quicken, whose founder and chairman is Dan Gilbert, brought its own lawsuit in Detroit days before the Washington lawsuit, claiming the government violated the federal Administrative Procedure Act in an investigation of Quicken dating back to 2012. It also contends the government improperly divined a pattern of violations based on a sampling of FHA-backed loans through Quicken, rather than reviewing all loans individually. That case before Judge Mark Goldsmith has been dismissed.

Bill Miller, public information officer for the U.S. Attorney’s office in Washington, D.C., said the Justice Department would not comment on the Quicken ruling Monday. A public relations coordinator for Quicken Loans did not immediately respond to an email request for comment.

Walton also found that the majority of events giving rise to the Justice Department’s lawsuit occurred in Detroit, and the federal government’s argument that officials and employees in the District of Columbia had more familiarity with the HUD policies and procedures was unconvincing. The government also contended that the Washington court had shorter backlogs and could handle the lawsuit more expeditiously — but Walton noted that the median time from a lawsuit being filed to reaching a result in court was eight months in Washington compared with 11.7 months in Detroit.

“The relative congestion of the Eastern District of Michigan weighs against transfer to that court — ‘but not by much,'” the ruling states.