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Guild Mortgage to Justice Department: See You in Court!

Phil Hall
May 20, 2016
In a relatively rare piece of pushback from a lender, Guild Mortgage Company is fighting back against charges from the U.S. Department of Justice (DOJ)

In a relatively rare piece of pushback from a lender, Guild Mortgage Company is fighting back against charges from the U.S. Department of Justice (DOJ) that the San Diego-based firm violated the False Claims Act by allegedly failing to properly originate and underwrite mortgages insured by the Federal Housing Administration (FHA).

In a press statement, President and CEO Mary Ann McGarry forcefully defended her company against the DOJ charges.

“The government's action is unwarranted and without merit,” she said. “The implication that any default on an FHA loan by a borrower represents wrongdoing by the lender is not justified. For more than five decades Guild has responsibly underwritten fixed rate and fully documented loans in accordance with FHA requirements.”

McCarry also questioned whether the DOJ was creating an “enforcement environment” the prevented lenders from properly serving their borrowers.

“It is unfortunate that lenders such as Guild have been placed in this untenable position where any minor error could result in substantial financial penalties,” she continued. “To help families with low and moderate incomes, we need to expand homebuying opportunities, not shrink them. Sadly, if this punitive environment continues, the cost of lending will continue to increase for FHA borrowers and only the wealthy will be able to buy homes.”

For its part, the DOJ was unapologetic about filing a complaint against Guild Mortgage in the U.S. District Court for the District of Columbia.

“This case is another example of the Justice Department’s continued efforts to ensure that lenders that participate in the FHA mortgage insurance program act in good faith and conduct appropriate due diligence when committing the United States to insure home loans,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “To protect the housing market and the FHA fund, we will continue to hold responsible lenders that knowingly violate the rules.”

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