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Nation’s Largest Privately Held Mortgage Lender Sued for Fraud

Allied Home Mortgage Capital Corporation and its CEO, Jim Hodge, have been sued by whistleblower Peter Belli, a former Allied branch manager. Belli’s case, filed by Milwaukee law firm Mahany & Ertl, was adopted by the U.S. government. The government joins Belli and others in claiming that Allied lied about its compliance with HUD regulations.

Allied has long been the target of many enforcement and compliance actions. Starting in 2003, the company has been sanctioned and sued repeatedly, although it has settled in almost every case without the admission of any wrongdoing.  Allied has also been the subject of multiple labor actions by former branch managers, loan officers and clerks. In 2007, the company agreed to pay $1.9 million to settle claims arising out of a U.S. Department of Labor investigation.

In the current action, former manager Peter Belli, represented by Mahany & Ertl and Attorney Joe Bird, claims the mortgage giant cut corners in order to write more loans, a practice that lead to HUD and U.S. Attorney Preet Bahara join Belli in the actions. 

The government claims that for loans written by Allied in 2006 and 2007, and later guaranteed by HUD, the default rate is a shocking 55% - one of the highest in the industry.

“Bad loans and sloppy underwriting are what got the U.S. housing market in such a mess,” said lead counsel Joe Bird.  Partner Brian Mahany added, “This case should send a strong message to Wall Street and other financial centers that if they choose to ignore the rules designed to protect people from the unscrupulous that justice will search them out and find them. As the saying goes, you can run, but you can’t hide your misdeeds forever, especially with this Attorney General watching.”

Lead counsel on the case announced will be the U.S. Attorney’s Office for the Southern District of New York. Milwaukee law firm Mahany & Ertl and Peter Belli’s counsel Brian Mahany and Joe Bird will remain active in the case.

Mahany & Ertl is a boutique law firm headquartered in Milwaukee, Wisconsin. The firm concentrates in fraud, asset recovery and tax matters. Attorney Brian Mahany is on the board of the International Association for Asset Recovery.

Courtesy Mortgage Fraud Blog

David Saks

Time&Temp Memphis

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Comment balloon 8 commentsDavid Saks • November 02 2011 01:17AM


David, looking at this I feel, we are going round and round in circles - and perhaps there is no way out...really sad!

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) over 8 years ago

Unfortunately banks and their borrowers are adversarial from the start. If borrowers don't pay, the bank can foreclose. What's devious is the banks purposely setting up a borrower knowing at some time in the future they won't be able to pay, and then, they, the bank, can take back the property. What's interesting in this is Allied's mistreatment of their customers ran over to mistreatment of their employees. Thanks for the post,

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) over 8 years ago

Following the rules is the way we should be able to do quality business.  These guys were not following them.

Posted by Tim Lorenz, 949 874-2247 (TIM LORENZ - Elite Home Sales Team) over 8 years ago

It's not good, Praful. Fraud tarnishes the reputations of lending institutions. The stain causes the erosion of trust.

Posted by David Saks ((retired)) over 8 years ago

Thanks for the post and the reminder to hold the "professionals" to higher standards than the consumers.


Posted by Jennifer Moran Foland, Las Vegas Homes, For Sale Summerlin NV (Keller Williams Realty Las Vegas) over 8 years ago

It's true that lending officials have needlessly committed acts of predation. However, some institutions have been meritorious in servicing and underwriting loans, Pamela. Not all lenders are bad. Fraud is perpetrated in the documentation, both prepared and acknowledged, by buyers as well. Allied has had a tough time. Presumably, subprime caused Allied to clean house and some formerly on the team resented it. It's predictable.

Posted by David Saks ((retired)) over 8 years ago

I'd be interested in hearing about any allegations of RESPA violations, Tim.

Posted by David Saks ((retired)) over 8 years ago

Thank you, Jennifer.

Posted by David Saks ((retired)) over 8 years ago

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